What tax rates apply to gift tax?
April 20, 2022 | 40,00 EUR | answered by Bernd Schreiber
Dear tax advisor,
I have a question regarding gift tax and hope that you can help me. My name is Petra Maier and I am in a situation where I would like to gift a larger sum of money to my son. I have heard that there may be taxes on gifts and I am unsure about the applicable tax rates.
Background: My son is about to graduate from his studies and is planning to start his own business afterwards. I would like to provide him with financial support to help him start his own business. The amount of money I would like to gift him is 100,000 euros.
Now to my concerns: I have read that there are different tax-free allowances and tax rates for gift tax, and I am unsure how these apply to my specific situation. I would like to know which tax rates apply to the gift of 100,000 euros to my son and what the tax burden would be in this case. Additionally, I am interested in whether there are ways to minimize the tax burden.
My specific question is therefore: What are the tax rates for gift tax for a gift of 100,000 euros and what would be the tax burden in my case? Are there ways to reduce the tax burden?
Thank you in advance for your help.
Sincerely,
Petra Maier
Dear Mrs. Maier,
Thank you for your question regarding gift tax. I am happy to help and explain to you the relevant provisions and tax rates in relation to the gift of 100,000 euros to your son.
First of all, it is important to know that in Germany, gift tax is levied when assets are transferred gratuitously. The rule is that the recipient (in your case your son) is responsible for paying the tax. However, there are tax-free allowances up to which no gift tax is due.
The tax-free allowance for gifts between parents and children is currently 400,000 euros. This means that your son can receive a gift of 100,000 euros from you without having to pay gift tax. Since your planned gift is below the tax-free allowance, there would be no gift tax due in your case.
However, if you are planning to make further gifts to your son or others at a later date, it is important to keep an eye on the tax-free allowances, as these apply per person and per 10-year period.
If you still wish to minimize the tax burden, there are various options you can consider. One option, for example, would be to gift in installments in order to make optimal use of the tax-free allowances. You could also consider gifting your son assets other than a sum of money, which may be treated more favorably for tax purposes.
It is advisable to seek individual advice from a tax advisor who can analyze your personal situation precisely and provide you with tailored solutions.
I hope this information has been helpful to you. If you have any further questions, please feel free to contact me.
Best regards,
Bernd Schreiber
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