Attention: Gift Tax For Benefits Between Spouses!

Stefan Winheller, LL.M. Tax (USA) – German Attorney at Law, Certified Tax Law Specialist

WINHELLER Attorneys at Law

Frankfurt am Main, Germany

The statement that gifts between spouses can be subject to taxation frequently leads to incredulous astonishment by clients – particularly when the gifts are not perceived at all as such by the parties concerned.

In the case of deposits of larger amounts of money by one spouse in an account, which he holds jointly with his spouse as a joint account, caution should, for example, be exercised. According to a recent judgment of the Federal Financial Court, the payment of one spouse to such an “or account” can lead to a benefit to the other spouse being subject to gift tax.

However, a prerequisite is that the non-depositing spouse actually possesses the money deposited and is legally free to dispose of half of it. In the adjudicated case, a total of just under 3 million Euro flowed from the sale of a participation of the husband into a joint checking account of the married couple.

NOTE: The German gift tax law, however, allows a taxexempt amount for benefits between spouses. Within a 10-year period, benefits totaling up to 500,000 Euro can flow tax-free.

Federal Fiscal Court, Judgment of November 23, 2011, Case II R 33/10.

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