The end of the year is all about giving. Gifts, attention and money. That is why many people use the festive month to make a donation to their children or grandchildren. Only: if you're not careful, most of it will go to the tax authorities instead of your loved one. How do you prevent that? We have listed that for you.
Please note: all amounts and percentages in this article apply to 2023 and change annually. We will update this article in early 2024.
In principle, your child or grandchild pays tax on a donation: from 10 to 36 percent. Fortunately, there are a few exemptions, for specific recipients, situations and donation purposes. A different donation maximum applies to each exemption: up to this amount the donation is tax-free, your child or grandchild pays tax on everything above.
General exemption
You may donate a maximum of €6.035 tax-free to each child, foster child or stepchild. This maximum applies per child, not per parent - even if you are divorced. And your grandchild, nephew, niece or someone else? You can donate €2.418 to them. In both cases, recipients can decide for themselves how they use the money.
One-off exemptions
In addition, there are three donations that are untaxed under certain conditions. You can do two of these only to your child, the third also to your grandchild.
- General donation – only to your child
You can give your child - again together with the other parent - a one-off gift of € 28.947. You can also use this exemption for a 'donation on paper' (see below). Please note, this donation falls outside the annual donation of €6.035 – you may not donate this amount in addition.
- Donation for an expensive study – only to your child
Does your child's education cost at least €20.000 annually, excluding subsistence? Then you may make a contribution of €60.298 – for the study costs, not the student debt. You must have this donation recorded by a notary. The deed must state for which study the money is intended, how much the course is likely to cost and that the donation will lapse if it is not used before 2026.
- Donation for a house to purchase – to your child or grandchild
Does your child want to buy a house, renovate it, pay off the home or residual debt, or buy off the leasehold? In other words: spending money on a house? Then you can donate €28.947.
Conditions for one-off exemptions
To be able to use the above exemptions, the following three conditions apply:
- The recipient or his/her partner is between 18 and 40 years old. The fortieth birthday still counts.
- The recipient has not previously used an exemption for a gift from you.
- The recipient must declare the gift in a gift tax return.
Additional conditions may also apply. You can find this at the website of the Tax Authorities.
Donate money while you really can't miss it? Then a donation on paper - also known as 'acknowledgment of guilt by generosity' - might be a good option. You give your child or grandchild money, but only on paper; you borrow it right away. As a result, you get a debt to your (grand) child, and he / she a claim on you. You pay at least 6 percent interest annually to your child or grandchild.
Recipients of this donation must pay gift tax as usual, unless you use an exemption for this. On the other hand, they pay less inheritance tax. Want to make a donation on paper? Then arrange this through the notary.
Want to know more?
Questions about donations, gift tax or this article? Please let us know, we will be happy to help you. Our Service Center can be reached every working day from 8.30:17.00 AM to 0345:851 PM via chat, sc@unie.nl and 963 XNUMX XNUMX.
