Donate
Almost everyone knows the saying "it is better to give than to receive." Giving something to another person is always nice.
You may have all kinds of reasons for making a donation, gift or endowment. Often donations are made for tax reasons.
We can help you make a responsible one-time donation or draw up a donation plan. In doing so, we look at the consequences for your financial position, of course, but also at any gift and/or inheritance tax and income tax liability.
Tax-free donation
Parents can gift an amount per year to children on which the child does not have to pay gift tax. The law states the amount that everyone can be gifted free of gift tax. We call this an "exemption. Only on that which a person is gifted more than his exemption must be paid gift tax.
Annual exemption 2023
The recipient pays no gift tax and does not have to file a tax return.
| Relationship donor and receiver |
Spending target | Tax-free amount |
Terms |
|---|---|---|---|
|
Parent(s) - child (By "child," the |
That's what the receiver itself |
€ 6.035 |
Parents see the IRS
If partners both |
|
Grandparent(s) - grandchild Uncle/aunt - cousin/cousin Brother - sister No family |
That's what the receiver itself |
€ 2.418 |
Partners sees the IRS
If partners both |
Single increased exemption
This exemption only applies if the recipient is between 18 and 40 at the time of the gift, or has a partner between 18 and 40. The day of the 40th birthday still counts.
The recipient of the gift must file a gift tax return. This can easily be done online in My Tax Office.
| Relationship donor and receiver |
Spending target | Tax-free amount |
Terms |
|---|---|---|---|
|
Parent(s) - child (By "child," the |
That's what the
An expensive study A home of your own |
€ 28.947 € 60.298 € 28.947 |
Tax-free donation by parent(s) to child |
|
Grandparent(s) - grandchild Uncle/aunt - cousin/cousin Brother - sister No family |
A home of your own | € 28.947 | Tax-free donation for a house for sale |
Jubelton
The large home-related gift is also known as the "Jubilee gift." The recipient must use the gift for the purchase or renovation of an owner-occupied home. It may also be used to repay the debt of an owner-occupied home or a residual debt of a sold home. This one-time increased exemption also applies if an owner-occupied home is donated instead of an amount.
The donation need not be obtained from a holder. It may be from any third party, so to speak. However, the recipient must be between the ages of 18 and 40.
The jubilee donation will be abolished. In 2023, only an amount of €28,947 can be donated tax-free. In 2024, the jubelton will disappear completely.
Donate calculation tool
The IRS has a very handy tool on its website that allows you to easily calculate how much gift tax you have to pay.
That is the donate calculator.
So whether you have to pay taxes on a gift depends on the value of the gift and your relationship to the donor.
Donating on paper
If parents do not have cash to gift to their children, but do own a home with a substantial excess value, for example, consider gifting in writing. This means that by notarized deed, parents first donate the amount to the children and then in the same deed immediately borrow it back from kun children. Parents then owe a debt to their children; the children have a claim on the parents.
Can this paper construction be done just like that? No, the IRS does set conditions. Only if an interest rate of at least 6% is stipulated on the debt and the parents actually pay that interest annually to their children, is the debt deductible for inheritance tax. If the interest is not paid, then it is not. So it does not make sense to make this gift if there are no other assets (for example, a house with a surplus value) against it.
What are the tax consequences of this gift on paper? The debt from the parents to the children falls into box 3 for the parents. The claim of the children on the parents also falls under box 3. Making a gift on paper therefore costs very little in tax terms. The parents receive the income from the donated amount, but do not have to pay a flat tax in box 3. The parents pay an interest to the children, who do have to pay the tax in box 3.
If parents have sufficient income but not large amounts of liquid assets, then it can be very attractive to make this type of donation. The disadvantage of this construction is that each year that parents want to make a donation, a notarial deed is required. You may not include a donation for several years in one deed; the tax authorities see that as a lump sum donation.
Gift of an annuity
If you want to give money to charity, you can make a gift in the form of an annuity. With this, you commit yourself for 5 years. The installments are then deductible for income tax under certain conditions.
Want more information or have questions? If so, please contact us.
We are happy to help.
Want more information or have questions? If so, please contact us.
We are happy to help.
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