What tax rates apply to gift tax?
March 27, 2022 | 50,00 EUR | answered by Fred Wittik
Dear tax advisor,
My name is Ben Lindenberg and I have a question regarding gift tax. My grandfather wants to give me a large sum of money, and I am concerned about the tax rates that may apply. I have done some research already, but I am unsure about the specific tax rates and how high they could be.
Regarding the current situation: My grandfather is planning to gift me an amount of 100,000 euros. I am the only grandchild and would like to use the money for purchasing a property. However, I am worried that high taxes may be incurred, affecting my financial planning. I would like to learn more about the specific tax rates for gift tax in order to estimate how much of the gift will actually reach me.
My concerns mainly revolve around not knowing exactly how high the tax rates are and how they impact the gift amount. I would like to understand if there are possible solutions to minimize the tax burden or if certain tax exemptions can be utilized. Additionally, I am interested in learning about ways to optimize the gift for tax purposes in order to reduce the financial burden.
Therefore, my specific question to you is: What are the tax rates for gift tax and how much would they amount to for a gift of 100,000 euros? Are there strategies or exemptions that I can utilize to reduce the tax burden? I would greatly appreciate a detailed explanation and any recommendations you may have.
Thank you in advance for your assistance.
Sincerely,
Ben Lindenberg
Dear Ben Lindenberg,
Thank you for your question regarding gift tax. It is understandable that you are concerned about the tax rates and how they could affect the planned gift amount. I am happy to explain the specific tax rates to you and provide you with some tips to minimize the tax burden.
Gift tax is a tax that applies to gifts of assets. The specific tax rates depend on the relationship between the donor and the recipient as well as the amount of the gift. In your case, as a grandchild, you would fall into tax class II. The tax rate starts at 15% and increases progressively to 30% for amounts over 75,000 euros. For a gift of 100,000 euros, you would be taxed at a rate of 20%.
To reduce the tax burden, you can take advantage of exemptions. In your situation as a grandchild, the exemption amount is 20,000 euros. This means that you can deduct the exemption amount from the gift amount of 100,000 euros, so that only 80,000 euros will be taxed. This reduces the tax burden to 16,000 euros (20% of 80,000 euros).
There are also other ways to optimize the gift for tax purposes. One option would be to spread the gift over several years to be able to use the exemptions again each year. You could also consider making the gift subject to a usufruct reservation to reduce the tax burden.
Overall, it is important to address the issue of gift tax early on in order to optimize financial planning. I recommend contacting an experienced tax advisor to discuss your individual situation and find a tailored solution.
I hope this information is helpful to you and I am available for further questions.
Best regards,
Fred Wittik
