Are there tax-free allowances for gifts to grandchildren?
March 3, 2022 | 50,00 EUR | answered by Fred Wittik
Dear tax advisor,
My name is Ella Schröder and I have a question regarding gift tax. I would like to give my grandchildren a larger sum of money, but I am unsure if there are any tax-free allowances for gifts to grandchildren.
The background is that I want to financially support my grandchildren and would like to give them a larger sum of money. However, I am concerned about the possibility and extent of gift tax that may apply, as I do not have extensive knowledge in tax matters.
Currently, I am unsure of the potential tax-free allowances for gifts to grandchildren and if there are any ways to avoid or minimize these tax aspects. Therefore, I am reaching out to you with the question of whether there are specific regulations or allowances that could benefit me in the planned gift to my grandchildren.
I would greatly appreciate a detailed explanation on this topic and possible solutions, in order to make an informed decision regarding the gift to my grandchildren.
Thank you in advance for your assistance.
Sincerely,
Ella Schröder
Dear Mrs. Schröder,
Thank you for your inquiry regarding gift tax in relation to your grandchildren. It is commendable that you want to financially support your grandchildren and I can understand your uncertainty regarding potential tax implications. I am happy to explain the relevant regulations and tax-exempt amounts for gifts to grandchildren.
In Germany, gifts are subject to gift tax. There are exemptions up to which gifts are tax-free. Special tax-exempt amounts apply to gifts to grandchildren, which vary depending on the relationship. The tax-exempt amount for gifts to grandchildren is currently 200,000 euros every 10 years. This means that you can gift money to your grandchildren tax-free up to this amount.
If the value of the gift exceeds the tax-exempt amount, gift tax will be due. The tax rates vary depending on the value of the gift and the relationship. However, there are various ways to minimize gift tax. One option is to spread the gift over several years to maximize the tax-exempt amount. Additionally, you can consider tax planning options such as using exemptions for gifts to children or taking into account tax deductions.
It is advisable to seek advice from an experienced tax advisor in this case to plan the tax aspects optimally and realize potential tax savings. A professional tax advisor can assist you in structuring the gift and develop individual solutions for your situation.
I hope these explanations help you and give you an overview of the tax-exempt amounts and tax aspects for gifts to grandchildren. If you have any further questions or wish for a more detailed consultation, I am at your disposal.
Sincerely,
Fred Wittik
Tax Advisor
