Are tax reliefs available on gifts (either during the donor’s lifetime or on death) to a spouse, civil partner, or to any other relation, or of particular kinds of assets (eg business or agricultural assets), and how do any such reliefs apply?

Private Client

Bulgaria Small Flag Bulgaria

As mentioned above, “common gifts” are exempt from donation tax. The Bulgarian tax legislation does not contain a definition for “common gifts”.

Based on the guidance of the Bulgarian tax authorities, when determining whether certain gift could be qualified as “common gift” it should be taken into account whether the gift is granted for a certain occasion. The value of the gift is also a decisive factor. Based on the scarce practice available so far it seems that the Bulgarian tax authorities tend to act more conservatively when determining whether a gift could be qualified as a common gift exempt from taxation (e.g. based on the guidance of the tax authorities a birthday gift in the amount of BGN 6 thousand could not be qualified as common gift and thus should be subject to donation tax).

Even not qualifying for common gifts, donations between spouses and lineal heirs, are exempt from donation tax.

Ireland Small Flag Ireland

Yes, there are prescribed reliefs that apply to lifetime gifts and to inheritances on death.

Transfers between spouses / civil partners
Transfers between spouses / civil partners are exempt from both gift tax and inheritance tax, CGT (unless the recipient spouse is outside the CGT charge in the year of the gift), and stamp duty.

Business Relief
Business relief is available in respect of business assets and unquoted shares in trading companies or holding companies.

The effect of the relief is that the taxable value of the business assets is reduced by 90%.
The relief is subject to certain restrictions, including retention periods.

Agricultural Relief
Agricultural relief is available for gifts and inheritances of ‘agricultural property’ (as defined in CATCA) taken by a person who is, on the valuation date and after taking the gift or the inheritance, a ‘farmer’ (as defined CATCA).

The effect of the relief is that the taxable value of the agricultural assets is reduced by 90%.
The relief is subject to certain restrictions, including retention periods.

If the recipient qualifies for both agricultural relief and business relief in respect of a gift or inheritance, they must only choose one relief.

United States Small Flag United States

All outright transfers by gift or bequest to a US citizen spouse qualify for the unlimited marital deduction and are not subject to gift or estate tax. Transfers in trust during lifetime or at death to a US citizen spouse will qualify for the unlimited marital deduction if during the spouse’s lifetime the trust (the ‘Marital Trust’) (1) is for the sole and exclusive benefit of the spouse; (2) no distributions from the trust may be made to any other person; and (3) all of the net income of the trust is required to be paid at least annually to the spouse. Likewise, property passing in the form of a life estate to a spouse in which some or all of the income is payable to the spouse but over which the spouse is granted a testamentary general power of appointment, will qualify for the unlimited marital deduction. The marital deduction is designed to defer the imposition of any transfer tax otherwise due on the transfer until the later death of the spouse.

No distinction is made between transfers to an opposite-sex spouse and transfers to a same-sex spouse.

No marital deduction is available with respect to a transfer outright to or in trust for a spouse who is not a US citizen unless the transfer is made by the donor spouse (or by the donee non-citizen spouse following receipt thereof) to a Qualified Domestic Trust (QDOT) containing statutorily-mandated provisions designed to ensure that any transfer tax otherwise due on the transfer will be paid to the US. A QDOT must be maintained under the laws of a US state or the District of Columbia and the governing instrument thereof must be governed by the laws of a US state or the District of Columbia. Generally, a bank or trust company organized within the US must act as a Trustee, and QDOTs over a certain size must provide for the filing of a bond with the US Treasury. In other respects, a QDOT must contain the provisions required above for a Marital Trust. Distributions of principal from a QDOT to the noncitizen spouse will attract US estate tax at the donor spouse’s estate tax bracket. Relief from the QDOT requirements may be available if the spouse becomes a US citizen and meets certain residency requirements.

France Small Flag France

As explained in § 5.1. only a 80,724 € allowance applies to gift tax due between spouses and civil partners for each fifteen-year period. They benefit, however, from a total exemption of inheritance tax (see § 5.2.).

Transfer by death of shares of operational companies may, under certain restrictive conditions benefit from a partial inheritance tax exemption amounting to 75%.

Italy Small Flag Italy

Exemptions from inheritance and gift tax are laid down for certain assets. Assets of cultural value that have been recognised as such by the Italian competent authorities prior to the death/gift of the individual are exempt from inheritance and gift tax. A 50% exemption applies to the Italian real estate of cultural value recognised as such after the decease/gift. Italian public debt securities are free from inheritance tax. The exemption applies also to public debt securities issued by EU or EEA Member States.

In order to facilitate the generation transfer of businesses, an exemption from inheritance and gift tax applies to the transfer of businesses and participations in companies and partnerships to spouses or descendants. For participations in companies, the exemption is subject to the additional condition that the recipient receives or reaches a controlling shareholding. The control must be retained for five years following the transfer, otherwise the exemption will be clawed back.

Israel Small Flag Israel

See Question 5 above.

Greece Small Flag Greece

Tax reliefs, further to above mentioned -under question 5- are also made available:

In regards to inheritance

(i) The acceptance of ships, shares or foreign ship-owning entities owning ships of a gross tonnage exceeding one thousand five hundred (1.500) tons.

(ii) Cash deposits to bank accounts with two or more beneficiaries (Joint Account) according to the provisions of Law 5638/1932 and subject to conditions [such as that the account opening contract makes reference to a clause whereby the deposits and account balance of the deceased shall automatically be conveyed to the surviving beneficiaries of the account].

(iii) Agricultural properties and establishments subject to conditions such as that the heirs are spouses/children/siblings/parents/grandchildren of the deceased and exercising personally and mainly agricultural occupation.

Germany Small Flag Germany

There are personal allowances available for transfers on death or by gift which are available every 10 years. E.g. the allowance for spouses is € 500.000, for children € 400.000, for grandchildren € 200.000. There are also allowances for certain assets that may apply, e.g. for the transfer of the family home. Business property relief may apply with up to 100% for transfers of business (including shareholdings) or agricultural assets. However, this is subject to various conditions to be tested in the individual case.

Belgium Small Flag Belgium

The most important tax reliefs concern the family dwelling and the assets of family owned businesses or shares of family owned companies.

Family dwelling
In the Flemish and the Brussels Capital Region, the part of the family dwelling that is inherited by the partner is exempt from inheritance tax. The ‘partner’ is defined as (i) the deceased’s spouse, (ii) his legal cohabitant or – but only in the Flemish Region – (iii) the person with whom he has cohabited de facto for at least three years and with whom he has had a common household.

In the Walloon Region, subject to conditions the first part up to EUR 160.000 in the family dwelling that is inherited by the partner or in direct line is exempted from inheritance tax. The part exceeding EUR 160.000 is taxed at progressive rates that go from 5% to 30% (30% as from EUR 500.000). ‘Partner’ is defined as (i) the deceased’s spouse or (ii) his legal cohabitant. However, as from 1 January 2018, a full inheritance tax exemption will apply to the part in the family dwelling that is inherited by the partner, regardless the value of that part.

Only the Walloon Region provides for a specific regime for the donation of the family dwelling. Subject to conditions, a reduced progressive gift tax rate of 1% to 30% applies (30% as from EUR 500.000) to the donation to the spouse or the legal cohabitant.

Family owned businesses and companies
Each region has a specific regime for the donation or inheritance of assets invested in a family owned business or shares of a family owned company, subject to certain conditions. The conditions in the Flemish and Brussels Capital Region are almost identical.

In all three regions, a donation of those assets or shares is tax exempt if all conditions are met. In the Walloon region, the exemption can also apply to shareholder loans to the family owned company.

If inherited, these assets or shares are taxed at a flat inheritance tax rate of 3% or 7% in the Flemish and Brussels Capital Region. In the Walloon Region, the conditions are more strict, but if met, an inheritance tax exemption applies to these assets or shares and even to shareholder loans to the family company.

British Virgin Islands Small Flag British Virgin Islands

Real property transfers to a spouse or close relation may be made by way of ‘love and affection’ as the consideration. Such a transfer is taxed at deeply discounted rates – in the case of Belongers the tax is reduced from 4% of the market value to a flat US $5 and for non-Belongers the tax is reduced from 12% of the market value to 5% of the market value.

UAE Small Flag UAE

N/A.

New Zealand Small Flag New Zealand

There are no gift taxes in New Zealand and therefore no applicable tax reliefs exist.

Monaco Small Flag Monaco

No tax is levied on gifts between ascendants and descendants in direct line (ie parents and children) or between spouses. Otherwise, see question 5.

Switzerland Small Flag Switzerland

See above question 5.

United Kingdom Small Flag United Kingdom

6.1 Transfers between spouses and civil partners (whether during life or on death) are generally exempt from inheritance tax (§5). However, this exemption is limited to £325,000 if, at the time of the transfer, the transferor is domiciled (§1.9) or deemed domiciled for inheritance tax purposes (§5.9) in the UK and the transferee has neither such status. If the transferee elects, after the transferor's death, to be treated for inheritance tax purposes as domiciled in the UK, the exemption is unlimited, but the transferee then suffers the other inheritance tax consequences of being treated as domiciled in the UK, unless and until he has completed a period of 4 successive tax years (§2.13) of non-UK residence (§1.5-1.7) beginning any time after the date of the election.

6.2 For the purposes of capital gains tax (§2.6), while the disposal of an asset by way of gift is generally deemed to be for a consideration equal to the market value of the asset (§5.10), where the gift is between spouses or civil partners who are living together, the donee's base cost in the asset is generally deemed to be the donor's, so that no chargeable gain (§2.7) arises.

6.3 Lifetime gifts are exempt from inheritance tax (§5) if their value does not exceed £3,000 in each tax year (§2.13), and this exemption can, to the extent unused, be carried forward to the next tax year. In addition, lifetime gifts made by an individual in any one tax year to any one person are exempt from inheritance tax if their total values do not exceed £250. Further, regular lifetime gifts made by an individual out of his spare income are exempt from inheritance tax if they are part of his normal expenditure and do not diminish his normal standard of living. Gifts within certain limits made on the occasion of a marriage or civil partnership (e.g. a gift of up to £5,000 by a parent to a child who is getting married) are exempt from inheritance tax.

6.4 Agricultural property may enjoy complete relief from inheritance tax (§5) on a lifetime transfer or on death. Relieved agricultural property includes not only farmland but also cottages, farm buildings and farmhouses of a character appropriate to the land, but in each case only to the extent of the agricultural value of such assets (and not, for example, in respect of development value). For the relief to be available, the agricultural property must have been (i) occupied by the transferor for the purposes of agriculture for two years before the date of the transfer or (ii) owned by him throughout the period of seven years ending with that date and occupied throughout that period (by him or another) for the purposes of agriculture.

6.5 Business property may also enjoy complete relief from inheritance tax (§5) on a lifetime transfer or on death. The relieved property may consist of shares in a company which carries on the business (or in its holding company), or of a direct interest in the assets of a business. The full relief is not available in respect of shares listed on a recognised stock exchange, with the Alternative Investment Market (AIM) not being "recognised" for this purpose. The relief is not available where the business consists wholly or mainly of dealing in securities, stocks or shares, land or buildings or making or holding investments. The relief is restricted where non-business assets or surplus cash are held by the company. For the relief to be available, the business property must have been owned by the transferor for two years before the date of the transfer.

Updated: January 22, 2018