German gift tax – Asset planning during lifetime

Donations of real estate or other assets are a central instrument of succession. The consideration and optimization of the German gift tax plays an important role. Especially with prudent and long-term planning, there is regularly a great deal of potential for saving gift tax. German inheritance tax and gift tax are directly linked. The transfer of assets takes generally place with the occurrence of the inheritance. In order to avoid a high inheritance tax for the heirs, assets can already be donated during their lifetime. In this case, however, gift tax applies, which should be kept as low as possible or should be avoided completely at best.

German gift tax optimization during lifetime

The gift tax is levied essentially according to the same rules as the inheritance tax. The tax burden depends on the degree of relationship and the value of the gift. Through gifts during lifetime, allowances can be used, so that tax-free donations are possible. Every ten years, every recipient may take full advantage of the allowances for assets. In order to avoid high tax payments, the allowances therefore should be used in advance during lifetime.

Even if you receive a donation from abroad and you have a residence in Germany, the German regulations apply and the donation must always be reported to the tax office. We recommend to get in touch with an expert for gift tax before making a gift in order to optimize the gift for tax purposes.

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