Gifts of household effects and gifts for upbringing and education
Gifts of ordinary household effects are not subject to gift tax, unless the value of a single item is €4,000 or more. Similarly, gifts given for purposes of education, upbringing or maintenance are exempt from tax, unless the recipient can use the gift for some other purpose.
Ordinary household effects may be donated free of tax
For gift tax purposes, ‘ordinary household effects' refers to movables, such as furniture, rugs, clothes, appliances and kitchen utensils in the household.
It does not refer to exceptionally valuable paintings, sculptures or other works of art. The Tax Administration assesses whether a work of art is exceptionally valuable separately in each case.
If the value of a single item of household effects received from a donor is €4,000 or more, it will, however, be included when the gifts received from the same donor in the course of 3 years are added up. More information on the 3-year rule in gift taxation
You may receive household effects as tax-exempt gifts more than once in the course of 3 years if the value of each individual item is below €4,000. In these cases, the rule that the gifts given in the course of 3 years are added together is not applied.
Gifts given for purposes of education, upbringing or maintenance
No gift tax is collected if you pay daily expenses on another person’s behalf, such as study fees or other expenses relating to education, upbringing or maintenance. In other words, you can pay the rent or the electricity bill or buy school books and groceries for someone. Such gifts are not subject to gift tax, unless the recipient can use the gift for some other purpose. In practice, you must pay the bills or expenses directly to the landlord’s bank account or at the grocery store, for example.
If, instead, you give cash to the gift recipient to cover the expenses, the gift is subject to gift tax. The gift is subject to tax because the recipient can use the gift for some other purpose.
Example of a gift given for purposes of education
If you have a child who is studying in a foreign country, you can pay their study fees free of tax. If you transfer money directly to the bank account of the college or university, your child is not liable to pay gift tax. However, if you transfer money to your child’s bank account to cover their study fees, the gift is subject to gift tax because the money could be spent on other things.
Example of a gift given to cover living expenses
You can pay the rent on someone’s behalf free of gift tax. However, the gift is tax-free only on the condition that you transfer the money to the landlord directly. If you transfer money to the bank account of the person whose rent you wish to pay – the tenant – it is not treated as a tax-free gift because an opportunity exists to spend the money on other things.
Frequently asked questions
If you make payments for a home loan that belongs to another person, the sums of money you pay are considered a gift to the other person. These payments are therefore subject to the same rules as any other gift. If the sum of these payments amounts to €5,000 or more over a three-year period, the person with the home loan must file a gift tax return and pay gift tax on the loan payments you have made on their behalf.
Instructions for filing and paying gift tax
Key terms: