Everything provided by the current legislation for the taxation of donations and parental benefits is explained through the recently published manual of the Independent Inland Revenue Authority, which contains answers to common questions on tax law issues .
The period, the method of submitting the declarations, the conditions and limitations of the exemption from the tax in the case of obtaining a first residence, the scales of tax calculation and what is applicable during the limit cases are listed in detail in the form of answers to 12 commonly asked questions and for the purpose of fully informing taxpayers.
The most common questions and the corresponding answers of AADE are detailed as follows:
1. When is tax imposed on the parental gift allowance?
Parental benefit or donation tax is imposed when an asset or monetary amount is transferred to a natural person or when an asset or monetary amount is donated by a natural or legal person.
2. Who should submit the declaration of donation-parent benefit?
The declaration must be submitted by both contracting parties (donor and recipient).
3. To which tax agency is the gift-parent benefit tax return submitted?
The declaration is submitted to the DOU of the income tax of the person liable for gift or child tax, and if the competent authority to receive the income tax declaration is the KEFODE of Attica or Thessaloniki, it is submitted to the KEFOK of Attica and Thessaloniki, respectively. If the donee or the child lives abroad or has his headquarters abroad, KEFOK Attica is responsible.
4. What is the deadline for submitting the benefit-parent tax return?
If there is a notarial document made for the donation or benefit of the parent, the declaration is submitted before the contract is made. If no contract is made, the declaration is submitted within 6 months from the delivery of the item of donation or benefit to the parent.
5. What are the conditions for the exemption of the first residence from the parental allowance tax?
a) The child requesting exemption, his spouse and their minor children do not have the right to full ownership or bear fruit or live in another residence or an ideal part of a household that can answer of the family’s housing needs or the right to full ownership of a buildable plot of land or an ideal piece of land, corresponding to a building site that meets their housing needs and located in a town or community with a population of more than 3,000 inhabitants. Housing requirements are considered to be covered if the total area of the properties above 70 sq.m., increased by 20 sq.m. for each of the first two children and the 25 sq.m. for the third and each of the subsequent children of the beneficiary.
b) The child must be Greek or a citizen of EU member states. and EEA countries.
c) The property to be acquired through absolute ownership and its entirety.
d) The tax exemption for the acquisition of a first house is given at one time. The child is not exempted if he or his spouse or their minor children are already exempted from transfer or parental benefits or inheritance tax.
e) The residence or plot of land must remain in the possession of the child for at least five years.
f) The request for exemption is submitted with a timely declaration before the contract is executed.
6. What are the tax-free amounts for acquiring a first home with parental benefit?
The exemption is granted for a house value of up to €200,000 for each minor or unmarried and up to €250,000 for married, which is increased by €25,000 for each of the first two children and the €30,000 for the third and each of the following minor children, whose custody is held by the beneficiary. The amount of the exemption also includes the value of a car park and a storage space, for a surface area of up to 20 m2 each, as long as they are on the same property and acquired at the same time. An exemption is also granted for estates worth up to €50,000 for each minor or unmarried person and up to €100,000 for each married person, increased by €10,000 for each of the first two children and €15,000 for the third and each following children. The above amounts apply to the acquisition of a first house with inheritance and parental allowance. The above surcharge, regarding the inheritance tax, is valid, as long as the heir can inherit a residence or a plot of land in general and in full ownership and not a percentage that cannot be divided.
7. How is the gift tax – parental benefit calculated?
Taxpayers, depending on their kinship with the donor, are classified into three (3) categories, for each of which different tax scales apply to different tax-free amounts and fees.
Category A includes:
a) The spouse or the person with whom the donor has entered into a cohabitation agreement,
b) children,
c) the grandchildren and
d) the parents of the donor.
The B category includes:
a) blood descendants of the third and subsequent degrees (great-grandchildren, etc.),
b) second and subsequent blood ascendants (grandparents, great-grandparents, etc.),
c) voluntary or judicially recognized children against the ascendants of the father who recognized them,
d) the descendants of the recognized against the recognized and his ascendants,
e) siblings (half-brothers or half-brothers),
f) third degree blood relatives (nephews of the heir or the donor),
g) stepfathers and stepmothers,
h) the children from the spouse’s previous marriage,
i) illegitimate children (brides and grooms) and
j) the descendants (father – mother-in-law) of the heir or the donor.
Category C includes anyone related by blood or bloodline or exotic to the donor.
8. What are the applicable tax scales on donations-parental benefits?
A new tax measure applies to beneficiaries of category A’, for donations or parental benefits made to them from 1-10-2021, with a tax-free limit of 800,000 euros and the imposition of a tax at an independent rate of 10% for the excess amount after the deduction of the tax-free amount, provided that the taxable value of the asset donated or where the welfare of the parent is concerned is more than 800,000 euros.
For qualified persons in B’ and C’ categories, the scales listed in the relevant tables apply.
9. To which assets does the new measure of Category A apply to donations and parental benefits?
It applies to donations and parental benefits of any type of property (movable and immovable), whose recipients are people in category A’ (spouse, cohabitant, children, grandchildren and parents ) and parental benefits or monetary donations to the above persons. , as long as it is done (can be) by transferring money through financial institutions.
10. How is a parent’s donation or provision of money taxed?
The donation or provision of the parent in the amount of money (except those transferred through financial institutions, where a tax-free 800,000 euros is available for the beneficiaries of the A’ category), is taxed independently at a rate of 10% for of recipients under the A’ category, 20% for recipients belonging to category B and 40% for recipients belonging to category C.
11. How many installments are tax paid on donations and parental benefits?
a) The tax arising on the basis of an initial or timely amendment declaration is paid in 12 equal two-month installments, not less than €500, except the last. If the donor child is a minor, the number of installments is doubled, provided that each installment is not less than €500, except for the last one.
b) After submitting an overdue amendment declaration or after the audit, the tax is paid within 30 days from the notification of the corrective determination action.
c) If there is a final decision of the administrative court, the tax will be paid in two equal monthly installments.
d) In the case of a donation-parent provision of monetary value and mobiles, the tax is paid as a rule within 3 days from the submission of the declaration or from the issuance of the act of administrative determination of tax respectively.
12. How are tax returns submitted for parental benefit donations?
The initial timely declaration of donation tax and parental allowance, for cases where the drawing up of a contract is required, is submitted digitally through the my PROPERTY application (https://myproperty.aade.gov .gr), before the contract is drawn up and signed, if they are concerned:
a) properties located in areas where the system of Objective Property Value Determination (APAA) is applicable,
b) movable assets of any kind (identifying shares, receivables, values, vehicles, works of art, etc.) and
c) amount of money of persons belonging to category A’.
Digitally through the my PROPERTY application, the amended statements above, as long as the relevant contract has not been executed, as well as the lower initial declarations of donation tax-giving to parents of mobile phones or money made from 1/1/2022 onwards and for which a notarial document is not made. In particular:
a) The initial (due and overdue) tax declarations of the parent’s donation/giving of movable assets (indicating vehicles, company shares, listed or unlisted shares, works of art, etc. pa) to the beneficiaries of all categories of the tax scale. Also, the initial (due to overdue) gift/return of the parent’s tax, which is transferred to the beneficiaries of the A’ category of the tax scale by transferring between financial institutions.
b) The initial (due to overdue) donation/parent tax declarations, except those defined in paragraph a).
Declarations about other cases of donation-paper tax benefits are still submitted in paper form, through the “My requests” application, or in the procedure specified in Decision A.1137/2020 under item A. 1137/2020.