What role does the amount of assets play in the gift tax?
November 21, 2023 | 50,00 EUR | answered by Eiko Hoffmann
Dear tax advisor,
My name is Valentina Waldmüller and I have a question regarding gift tax. My grandfather is planning to give me a larger sum of money to support me financially. However, I am concerned about how the amount of wealth will impact the gift tax.
My grandfather has a considerable amount of wealth, and I am wondering if the size of the gift has an influence on the taxation. Is there a specific amount at which the gift tax increases? Or are there ways to minimize the tax burden when dealing with larger sums?
I want to make sure I consider all tax aspects and avoid any unexpected costs. Could you please explain to me the role of the amount of wealth in gift tax and what measures I can take to optimize the tax burden?
Thank you in advance for your assistance.
Best regards,
Valentina Waldmüller
Dear Mrs. Waldmüller,
Thank you for your question regarding gift tax. It is understandable that you are concerned about how the amount of the gift affects the tax burden and how you can possibly minimize the tax. I will try to answer these questions as comprehensively as possible.
First of all, yes, the amount of assets being gifted does have an impact on gift tax. In Germany, there is a tax-free allowance for gifts, up to which no gift tax is due. For example, the tax-free allowance for children is 400,000 euros. If the amount of the gift exceeds this threshold, gift tax is due.
The gift tax itself depends on the amount of the gift and the relationship between donor and recipient. The higher the amount of the gift and the more distant the relationship, the higher the tax rate. There are different tax brackets ranging from 7% to 50%.
There are various ways to minimize the tax burden. One option is to spread gifts over a longer period of time in order to be able to use the tax-free allowance each time. Certain tax-free allowances can also be used multiple times, for example, every 10 years for children.
Furthermore, there are various tax planning options to optimize gift tax. It is advisable to seek advice from an experienced tax advisor who can find individual solutions for your situation.
It is important to keep all tax aspects in mind to avoid unexpected costs. Therefore, I recommend that you contact a tax advisor early on to discuss all options and find the best solution for you.
I hope this information has been helpful to you. If you have any further questions, please feel free to contact me.
Best regards,
Eiko Hoffmann
