How much can you donate free of tax?
As a donor, you can give a person a tax-exempt gift, worth less than €5,000, every 3 years.
The above threshold concerns the donor. This means that one donor can make more than one tax-exempt gifts as long as the threshold is not exceeded, or as long as the recipient is another person.
On the other hand, the gift recipient can receive gifts from several donors, i.e. from different givers of gifts. In this case, the gifts can be tax-exempt. For determining whether gift tax must be paid, the important matter is that over the course of 3 years, the gifts you get from one giver stay below €5,000 in value.
Example: On 5 September 2023, Pekka’s and Mirja’s mother and father donate €4,999 each to both of their children.
In other words, Pekka received €4,999 from his mother and another €4,999 from his father – receiving €9,998 in total.
Also receiving €9,998 in total, Mirja received €4,999 from her mother and another €4,999 from her father.
Next time when Pekka’s and Mirja’s mother is able to make a similar tax-exempt gift of €4,999 to both children will be 5 September 2026. This also concerns Pekka’s and Mirja’s father — next time he can give €4,999 to both children will be 5 September 2026.
Example: The child’s godmother donates €1,000 to the child on 15 February 2023. However, she donated €1,500 to the child already on 24 December 2021. For purposes of gift tax, as the total within three years stays below €5,000, her gift is exempted from gift tax.
Because no gift tax is imposed in this case, the gift recipient does not have to file a return unless so requested by the Tax Administration. However, sometimes it is advisable that you should also submit a gift tax return when you receive a gift of smaller value. If you were to sell the asset later, you could then use the confirmed gift tax value of the asset as the acquisition cost.
Moreover, if you make a gift of household effects or donate money for purposes of education, upbringing and maintenance of the gift recipient, your gift may be exempted from tax. Read more about gifts of household effects and gifts for upbringing and education.