How does Schenkungsteuer (gift tax) work in Germany?

Schenkungsteuer (gift tax) applies when assets are transferred without payment between living persons. It is governed by the same law as Erbschaftsteuer, with identical tax-free allowances and tax rates. The recipient of the gift is primarily liable for the tax, though the donor is jointly liable if the recipient does not pay.

The tax-free allowances reset every 10 years per donor-recipient pair. A parent can transfer up to €400,000 to each child every 10 years without triggering gift tax. A grandparent can transfer €200,000 to a grandchild. Between spouses and registered civil partners, the allowance is €500,000. Beyond the allowances, tax is charged at rates from 7% to 30% for close relatives and from 15% to 43% for more distant relatives and unrelated persons.

Common uses include transferring property, shares in a family business, or financial assets to children before death to make use of the allowance multiple times. Gifts of the family home to a spouse or child who continues to live there are often exempt. If a gift is made within 10 years before death, it is included in the estate calculation, potentially reducing the available Erbschaftsteuer exemption. The gift recipient must file a gift tax declaration (Schenkungsteuererklarung) with the Finanzamt within three months of receiving the gift.

This is general information only, not professional tax advice. Consult a qualified tax professional for your specific situation.