What is Gift Tax?

Gift tax is a tax on the transfer of value from one living person to another without consideration, typically structured as a sibling to inheritance tax to prevent people from giving everything away just before death.

Most jurisdictions treat gift and inheritance tax as a single regime with a shared lifetime allowance. Germany grants EUR 400,000 per child every 10 years that can be used for gifts and inheritances combined. France allows EUR 100,000 per parent per child every 15 years. Switzerland, similar to inheritance, taxes gifts at cantonal level — usually exempting spouses and descendants.

Italy follows the inheritance regime: 4% above EUR 1 million per heir for direct relatives, 8% for unrelated parties. Many countries exempt small everyday gifts (birthday cash, wedding presents) up to a modest threshold.

Strategic lifetime gifting can significantly reduce a future estate tax bill. Common techniques include gifting investment portfolios to children early (so future growth happens in their estate), funding pension or third-pillar plans for a spouse, and using business succession reliefs for family companies.

Example

A French parent gives EUR 100,000 to their child. Under the EUR 100,000 per parent per child allowance (renewed every 15 years), zero gift tax is owed. The same EUR 100,000 gift between unrelated friends would be taxed at 60%.

Related terms

Inheritance Tax

Inheritance tax (or estate tax) is a tax on assets transferred from a deceased person to their heirs, calculated either on the deceased's estate as a whole or on each beneficiary's share, with rates depending on the relationship to the deceased.

Wealth Tax

Wealth tax is an annual tax on the net worth of an individual — total assets (real estate, investments, cash, vehicles) minus liabilities — levied in a handful of European countries including Switzerland, Spain, Norway and (limited) France.

Tax Allowance

A tax allowance (or personal exemption) is a fixed amount of income that is tax-free for everyone — or for specific categories of taxpayer such as the elderly, parents or low earners — applied before the tax brackets kick in.

Tax Deduction

A tax deduction is an expense or contribution that you can subtract from your gross income before calculating taxable income, reducing your tax bill by the deduction multiplied by your marginal tax rate.

Frequently asked questions

Is a gift to my spouse tax-free?+

Yes in most European jurisdictions, within generous allowances; Switzerland and France fully exempt.

Does the recipient or giver pay?+

The recipient in most countries; Switzerland generally taxes the recipient at cantonal level.

Do I have to declare cash gifts?+

Yes if above the annual allowance — tax authorities track large bank transfers and inheritance reconciliations.