What significance does the age of the recipient have for gift tax?
February 12, 2022 | 50,00 EUR | answered by Lina Walter
Dear tax advisor,
I am planning to gift my grandson a larger sum of money to give him a financial start into adulthood. However, I am unsure how the age of the recipient affects gift tax, so I am uncertain about the best way to proceed.
My grandson is currently 18 years old and is planning to start an education in the near future. I would like to financially support him and give him the opportunity to start his future without financial worries. However, I have heard that the age of the recipient can play a role in the calculation of gift tax and I am unsure if this could affect the amount of tax due.
Therefore, my question to you is: What significance does the age of the recipient have in gift tax? Are there differences in taxation for minors and adults? What do I need to consider when gifting to my grandson to avoid any tax disadvantages? Are there possible ways to minimize the tax burden?
I would greatly appreciate your expert advice on this matter as I want to ensure that my gift benefits my grandson in the best possible way. Thank you in advance for your support.
Sincerely,
Fanni Müller
Dear Mrs. Müller,
Thank you for your inquiry regarding gift tax in relation to your intention to give a larger sum of money to your grandson. It is commendable that you want to provide your grandson with a financial start into adulthood.
The age of the recipient does indeed play a role in gift tax. In general, the younger the recipient, the higher the gift tax. This is because the tax office assumes that the gift is more beneficial to minors, as they do not have their own financial means yet. On the other hand, for adults it is assumed that they already have their own financial means and the gift is not necessarily needed.
For minors, the usual tax-free amounts are 5,000 euros, which can be used every 10 years. For adults, the tax-free amount is 20,000 euros every 10 years. Beyond these tax-free amounts, gift tax applies, which can vary depending on the amount of the gift and the relationship between the donor and the recipient.
To avoid tax disadvantages and minimize the tax burden, there are various ways to structure the gift. One option could be to spread the gift over a longer period of time to optimally utilize the tax-free amounts. Also, considering whether the gift can be classified as educational support could have a tax-reducing effect.
It is advisable to consult with a tax advisor in a personal meeting to discuss the specific circumstances of your gift and find the best solution for you and your grandson. Professional advice can help avoid tax pitfalls and optimize the gift.
I hope these information have been helpful and I am available for further questions.
Sincerely,
Lina Walter, Tax Advisor
