Must a contract of donation be notarially recorded?
For the promise of a gift, yes: § 518 BGB requires notarial recording. If the gift is carried out immediately, this cures the defect of form. For property, however, this does not help, because § 311b BGB additionally applies there, and the conveyance needed for the cure must itself be declared before the notary. In practical terms: cash gifts handed over in person are valid without any form, gifts of property never without a notary.
How high are the allowances?
Under § 16 ErbStG: €500,000 for spouses and civil partners, €400,000 for children, €200,000 for grandchildren, €100,000 for the remaining persons in tax class I and €20,000 each for tax classes II and III. The last figure is regularly underestimated: for siblings, nieces and nephews, only €20,000 is available – a fifth of the amount for the remaining persons in tax class I.
Can I use the allowance again every ten years?
Yes, that is the basis of every staggered transfer. § 14 ErbStG provides that several benefits accruing “within ten years from the same person” are added together. If an earlier gift lies more than ten years back, it no longer counts, and the allowance becomes available again. The direction matters: the calculation runs backwards from each new gift, not in fixed calendar blocks.
What is the inheritance-law ten-year period about?
It is something entirely different from the tax one, and confusing the two is the most common mistake with gifts. § 2325 Abs. 3 BGB provides that a gift “is taken into account within the first year before the devolution of the inheritance in full, within each further year before the devolution of the inheritance one-tenth less”; once ten years have passed, it is disregarded. So it is not a switch that flips after ten years, but a ramp: after four years, 70% is still taken into account, after eight, 30%. Anyone who only has the tax period in mind massively underestimates compulsory-portion supplementary claims.
Does the tapering also apply to gifts between spouses?
No, and that is the exception that is almost never mentioned. § 2325 Abs. 3 BGB provides: “If the gift was made to the spouse, the period does not begin before the dissolution of the marriage.” As long as the marriage lasts, the ten-year period therefore does not even start running – the gift is taken into account in full on the devolution of the inheritance, regardless of how long ago it was made. Anyone transferring assets between spouses to reduce compulsory-portion supplementary claims achieves nothing by it.
Can I keep living in the apartment I gave away?
Yes, through a reserved usufruct or a right of residence. Both are entered in the Grundbuch and have two effects: you can continue to use the property, and the value of the gift for tax purposes falls, because the right is taken into account as reducing value. This is one of the main reasons property is transferred during a lifetime at all. The reservation must, however, be stated in the deed – it cannot be added afterwards.
What happens if the recipient becomes insolvent or gets divorced?
Without precautions, the assets are gone. This is why rights of reclaim belong in the contract: for the case of insolvency, compulsory enforcement, divorce or predeceasing of the recipient. They act as a safety net and are the reason a notarial arrangement achieves more than a simple transfer. Here, too: what is not in the deed does not exist – and nothing can be added afterwards, because the recipient would then have to consent.
Do I have to report the gift to the Finanzamt?
Yes. Gifts are subject to a duty to notify, regardless of whether tax ultimately arises. For recorded transactions, the notary transmits the notification; for gifts that are not recorded – for example, a bank transfer – the duty lies with the parties involved themselves. This is often overlooked, because many assume that below the allowance there is nothing to do. Since earlier gifts are added together under § 14 ErbStG, however, the assessment can change years later.
