Donations that were not made through a bank are taxed, the tax office ruled

By Prokopi Hadjinikolou

Appeals by taxpayers who request the cancellation of the taxes imposed on them for donations of monetary sums are rejected one after the other. The law does provide for a tax-free limit of 800,000 euros for donations and parental benefits, however, it sets specific terms and conditions. One of the main conditions in donating money to first degree relatives is that the money transfer takes place through the banking system.

Many cases have been identified where the money was taken out of the “layer” and then deposited in the bank. For these cases the tax authorities have normally imposed a tax of 10% despite the fact that the amount of the donation was less than 800,000 euros. And this as the procedure prescribed by law was half followed. According to Finance Ministry sources, the donation of money from the mattress to the bank cannot be identified as the origin of the money is not known.

In fact, in an objectionable appeal filed by taxpayers to the TEN of Thessaloniki, they request that the tax imposed be cancelled. Specifically, his grandfather donated an amount of 31,000 euros. He deposited the amount in cash into his grandson’s account. A tax of 3,100 euros was imposed by the tax office. The TEN considers that there is a circumvention of the legislation and the tax authorities rightly imposed the relevant tax.

However, there are also cases where the tax authorities do not interpret the legislation correctly. In another donation case, the transaction took place at the bank counter. In other words, the donee requested a withdrawal of 50,000 euros and requested that this amount be deposited with his son. The tax office imposed a tax of 5,000 euros incorrectly. And this transaction was done within the bank from one account to another. In this case, the TEN accepts the taxpayer’s appeal and cancels the relevant tax.

It is noted that a circular of the AADE stipulates that only donations and parental benefits made through the credit system or any financial institution recognized by the Tax Authority will be accepted by the tax office and will be tax-free up to the amount of 800,000 euros.

In particular, the parental benefit or the donation to the persons belonging to the A’ category (parents, children, couples and grandchildren) of any asset, as well as the parental benefit or the donation of money, which is carried out by transferring money through financial institutions, are subject to tax, which is calculated at a rate of 10%, after deducting a one-off tax-free amount of 800,000 euros. In the event that the donation is made in cash, it will not be recognized by the tax office. As can be seen from the circular, parental cash benefits of up to 800,000 as well as monetary donations of up to 800,000 between spouses or cohabiting partners or from grandparents to grandchildren or from children to parents are tax-free. This means that the 10% tax that was imposed until October 1st is abolished. In the event that the amount reaches 900,000 euros, a tax of 10,000 euros will be paid, corresponding to 10% of the excess amount of 100,000 euros).