Taxable gifts and tax-exempt gifts
You are liable to pay tax on a gift worth at least €5,000. You are also liable to pay tax if the same donor gives you several gifts in the course of 3 years and their total value exceeds €5,000.
If you receive such gifts, you must file a return to the Tax Administration. Gift recipients are responsible for filing a gift tax return and paying gift tax.
All kinds of assets and property given as a gift are subject to gift tax – not only money but also securities, fund units, shares in a housing company, real estate, cars, animals and valuables.
Maximum values of tax-exempt gifts
Your gifts are not subject to tax as long as the total value of gifts given to the same person in the course of 3 years does not exceed €5,000.
Example: Parents give money to their child. Each parent gives a cash gift of €4,999 on 1 January 2020. The next time either of them can give gifts worth €4,999 to the same child without gift tax liability is 1 January 2023.
If no gift tax is imposed, the gift recipient does not have to file a return unless so requested by the Tax Administration.
If you make a gift of household effects or donate for purposes of education, upbringing and maintenance of the gift recipient, your gift may be exempted from tax.
1) Gift worth €5,000 or more
You must file a gift tax return and pay gift tax if you receive a gift worth €5,000 or more.
2) Several gifts in the course of 3 years with total worth €5,000 or more
The gifts you receive within a period of 3 years from the same donor are added up even if they represent different types of assets and property, such as cash and securities.
When you receive several gifts from the same donor in the course of 3 years, the value of a new gift is added to that of the previous gift(s). The basis for our assessment of gift tax is the total value of the gifts. However, if you have already paid gift tax on a previous gift, we will take that into consideration when assessing the new gift tax.
When the total value of the gifts is €5,000 or more, you must complete a gift tax return to inform the Tax Administration of all the gifts you have received in the course of 3 years, even if the value of an individual gift is below the taxable limit. You must file a gift tax return within three months of the date on which the total value of the gifts has reached the €5,000 limit.
Examples of gifts received in the course of 3 years
When you go over the €5,000 threshold because of a new gift you receive, you must file a gift tax return and list all the gifts received from the same donor in the past 3 years.
Example: Antti gave €4,000 in cash to his daughter Liisa on 3 January 2018. Later, on 1 May 2019, Antti gave Liisa another cash gift; this time, the sum was €2,000. The total value of the gifts is €6,000. As the €5,000 limit is reached, Liisa files a gift tax return on the gift she received on 1 May 2019 and she also fills in information on the earlier gift that she received on 3 January 2018.
She must pay gift tax on the total value (€6,000) according to tax bracket 1. The tax is €180.
The gift tax is calculated from the total value of the gifts received during a 3-year period. Consequently, if you have paid gift tax on a gift and the same donor gives you another gift later, the amount you have already paid will be taken into account.
Please note that the calculation tables for gift tax were revised on 1 January 2017 and the gift tax rates changed. Even when the previous gifts have been received and gift tax has been paid before that date, the Tax Administration will apply the table that came into force on 1 January 2017 to calculate the gift tax that will be deducted from the gift tax on the new gift.
Example: On 1 January 2016, Antti gave his daughter Liisa a gift worth €5,000, on which she paid €180 in gift tax under tax bracket 1. Next year, on 8 April 2018, Antti gave Liisa a new gift, the value of which was €20,000.
Because the gifts were given by the same donor within a period of 3 years, the amounts are added up (€5,000 + €20,000 = €25,000). Gift tax on a gift worth €25,000 is €1,700 in tax bracket 1 in 2018. From this amount, the gift tax paid for the first gift will be deducted. However, the deduction is not €180, i.e. the tax that Liisa actually paid. Instead, it is €100 – the gift tax under the rules that came into force on 1 January 2017. The remaining amount for her to pay is thus €1,600 (€1,700 – €100).
The gifts you receive during a 3-year period from the same donor are added together, even if they represent different kinds of assets and property.
Example: On 1 January 2018, Antti gave his daughter Liisa a gift worth €75,000 – an apartment in a housing company – on which she paid €7,100 in gift tax under bracket 1. Later, on 1 May 2019, Antti gave Liisa another gift – a real estate unit – worth €200,000.
The gifts were received from the same donor within 3 years. For this reason, their values must be added up (€75,000 + €200,000 = €275,000). Gift tax on a gift worth €275,000 is €33,350 in tax bracket 1 in 2019. After deducting €7100, i.e. the tax Liisa paid earlier, the amount she still has to pay is €26,250.