Schenkungssteuer

Schenkungssteuer, or gift tax, is a German tax on gratuitous transfers of assets by private individuals during their lifetime (inter vivos). The tax is charged on the recipient of the gift (the donee) and is based on the value of the acquired assets. It is governed mainly by the Erbschaftsteuer- und Schenkungsteuergesetz (ErbStG).

Tax base and rates: The amount of tax depends on the relationship between donor and recipient and the value of the gift. Gifts are categorized into three tax classes, with progressively higher rates for more distant relationships. The rates generally range from single-digit percentages up to about 50%, increasing with the value of the gift. Closer relatives typically benefit from lower rates and higher tax-free allowances.

Exemptions and reliefs: Each recipient has a tax-free allowance (Freibetrag) that varies by relationship to the donor. If the value of the gift exceeds the allowance, the excess is taxed at the applicable rate. There are additional reliefs and exemptions for specific asset types, such as business assets or family-owned enterprises, and other special provisions that can reduce the burden in certain circumstances.

Valuation and administration: Tax is calculated from the fair market value of the gifted asset at the time of transfer. Real estate and business assets require particular valuation rules. Gift tax returns must be filed with the tax authorities within prescribed deadlines, with penalties for late submission or non-compliance. International or cross-border gifts may trigger German tax obligations, and international rules or treaties can influence liability.

Overview: Schenkungssteuer applies to lifetime gifts of movables, real estate, and other assets to individuals or entities, with rates and exemptions determined by relationship to the donor, value, and asset type. It complements inheritance tax and interacts with broader tax and civil-law considerations.