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Donation

Donating is the transfer of assets during the life of the donor without any consideration being given in return. Doing a gift may result in gift tax having to be paid. There are exemptions that prevent or reduce the levy of gift tax

Why donate?

There are many reasons why people want to donate. You may have had a financial windfall that you want others to benefit from. It may also be that a special occasion or event is the reason to make a gift to someone, such as:

– The start or completion of a study;

– The purchase of a house by a child;

– A work anniversary of a colleague or a business relation;

– Amarriage or the birth of a child.

In addition to, in principle, one-off donations as described above, there may also be reasons to make more frequent donations, for example in the context of a gradual transfer of wealth.

to your children or multi-year support for a good cause. Certainly, if you are considering making donations over a series of years or if you want to make a large donation, it is wise to check whether that fits your financial situation. It

drew up a personal financial plan that can help. The following questions are addressed:

-What is the expected development of your assets?

-What is the influence of the donations on your assets?

-How high is your income now and how high will it be in the future?

Exceptional provisions

Exclusion clause

Donors often want their donation to benefit the recipient. If the recipient is married in a community of property, the gift falls into the joint property of the couple. By attaching an exclusion clause to the donation, you prevent this and ensure that the donation only accrues to the recipient.

Reign

In the case of a gift to young children, it is often not the intention of the donor that the child already has access to it at that age. Gifting under administration can be a solution for this. The donation benefits the child, but the child cannot dispose of it himself until an age determined by the donor.

How can you donate?

 Donating can be done in many ways. You can donate money, but also goods. You can donate money in cash, but also “on paper”.

In cash

A cash donation is simple: you transfer the amount to be donated to the recipient of the donation. You can also do this per bank.

On paper

In that case, you do not transfer money, but declare that you owe a certain amount. You then have a debt and the recipient of the gift has a claim against you. A notarial deed must be drawn up for a donation on paper if the donation is only due and payable upon death. In the deed of gift, you determine when the claim is due, for example in the event of your death. You pay interest every year on the amount owed. When the interest on this debt is at least 6% per year, the debt will be deducted from your estate in due course. This means that less inheritance tax has to be paid.

Goods

A gift of goods is also possible without drawing up a deed of gift. You transfer the good to be donated to the recipient, who can then dispose of it.

Gift tax:

Anyone who receives a gift must pay tax on the value of the gift. The amount of the gift tax depends on the relationship between donor and recipient and on the amount of the gift.

Exemptions

If the gift remains below a certain limit, the recipient does not have to pay gift tax. Like the rates, the exemptions are also related to the relationship between donor and recipient.

Exemption from gifts from parents to children An exemption of € 6,604 per child per year applies to gifts from parents to children. This amount does not depend on the age of the child. The exemption for gifts from parents to children is increased once in the child’s life to € 26,881. This increased exemption is age-dependent: the child must be 18 years or older, but younger than 40 years at the time of receiving the gift. Is the child older than 40, but his partner younger? Then the one-off increased exemption can still be applied. The increased one-off exemption of €26,881 can be further increased to €55,996. This additional increase is subject to the condition that this amount is used to pay for an expensive study. An exemption from gift tax of € 105,302 will apply in 2021 for a gift to finance an owner-occupied home. The age limits do apply to this exemption, but the family connection no longer applies. From every donor, an exempt

Exemption from other donations

An exemption of € 3,244 applies to gifts other than from parents to children. This exemption applies per person from whom you receive a gift. If you receive several gifts from the same person in one year, you must add them together. So you cannot receive more than € 3,244 per year from one person tax-free.

Real estate

When donating immovable property, the recipient must take into account not only gift tax, but also transfer tax. Transfer tax is the tax levied on the transfer of immovable property. The gift tax to be paid is reduced by the transfer tax paid. If you are planning to donate an immovable property, get advice from an expert

Business succession

A special arrangement applies to the donation of a company. In order to make use of this scheme, a number of conditions must be met. If that is the case, the company can be transferred (almost) free of gift tax. However, other taxes that may play a role must be taken into account. Before proceeding with the donation of (part of) the company, it is wise to seek expert advice. We are happy to help you.