Greece increases the gift tax exemption bracket from 1 October 2021 – Inheritance tax
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New rules apply from 1.10.2021 bringing the tax exemption bracket for parental donations, as well as donations between relatives (spouses, parents, children and grandchildren) to 800,000 euros, instead of the threshold of €150,000 previously applicable for non-cash property. The same exemption applies to cash gifts, which were hitherto subject to a 10% tax, without any exemption bracket.
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It should be noted that, until today, inheritance and gift taxes were both assessed on the basis of uniform tax brackets. Following the introduction of the new rules, gifts are subject to reduced taxation compared to inheritance, since the exempt bracket of inheritance tax of 150,000 euros remains unchanged.
The new rules apply to donations made from 1.10.2021, while the value of donations made before this date is not taken into account for the calculation of the tax exemption bracket of 800,000 euros. What makes the new provision even more favorable compared to the previous regime is that such gifts up to an amount of 800,000 euros are not taken into account when applying the inheritance tax brackets for the remaining estate.
The changes in question may reduce tax avoidance with respect to parental or close donations of any kind of assets made by Greek tax residents, as well as donations of real estate or other assets located in Greece, made by non-Greek tax residents. The new rules, combined with the expected increase in statutory property values from 1.1.2022, are expected to accelerate donation transactions over the coming months.
The potential tax benefits arising from the new rules are described below, by way of example.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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