If you make a donation to your children, grandchildren or someone else, up to 40% tax must be paid on this. By making use of the annual gift tax exemptions, you can prevent this completely or partially. If you would like to make a donation this year, please do so before 1 January 2021.
Donation to children
Donate tax-freeA donation to the children is the most common. There are various exemptions for this. You can use one of them every year. In 2020, this annual tax-free donation to children amounts to € 5,515 per child.
Specific Exemptions
In addition, there are one-off specific exemptions for your children. For example, you can make a one-off donation of € 26,457 to each of your children between 18 and 40 years old. If the money is demonstrably used for an expensive study, the one-off exemption amounts to € 55,114.
Own home exemption
Donations for the purchase of an owner-occupied home are exempt in 2020 up to an amount of € 103,643. This exemption applies not only to your children, but to everyone, including your grandchildren. There are a number of conditions, the most important of which is that the recipient is between 18 and 40 years old.
Grandchildren also tax-free?
In addition to the exemption for the purchase of a house, there is no specific tax exemption for gifts to grandchildren. However, you can make use of the general annual exemption, which in 2020 is € 2,208. If you give more to your grandchild (ren) than this amount, a lower tax rate will apply to them.
prices
If you donate an amount of more than € 5,515 to your children, the tax rate is 10% on the excess up to € 126,723 (this does not apply to the one-off exemptions). Above this amount, the rate is 20%. For grandchildren the rates are 18% up to € 126,723 and 36% on the excess, for arbitrary third parties the rate is 30% up to € 126,723 and 40% on the excess.
