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Old 30.08.2020, 22:53
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Gift Tax and unexpected tax bill

Hi. Looking for advise on my crazy situation.


I gave my partner (not married) 20% of my recently purchased new property in the summer of 2019, so approx 400k chf on paper. We were both C permit holders. I expected that there might be some gift tax at some point, however, work, life and children put that further down the to do list. Unfortunately later in the same year my partner decided to go back to DE and de-registered Mid November in 2019. She recieved the gift as she was registered at a Swiss resident. I am now being told that the gift Tax that would normally be around 15K is all of a sudden going to be 90k (x6) because my partner will be judged as being a non resident for the 2019 tax year. Yes, we were fullish not to look into the consequences of my partner leaving in the same tax year as recieving the gift. German Tax man does not want any of this Tax and judges my partner as a Swiss resident for 2019 and she is allowed to bring her wealth (the 400K) on paper back to DE with no problems. So DE says she was Swiss when she got the gift; however CH is taxing her as being a DE resident, kind of contradicting each other. Its painfull, any advice welcome. Thanks
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Old 30.08.2020, 23:29
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Re: Gift Tax and unexpected tax bill

Normally the tax is due on the date of the gift.

There is a slight tax advantage (tax free amount of 50k ) when you live in the same household as your partner. This means tax would be due on 350k and it is around 87k.

I do not see how the tax bill could have been only 15k. 6x multiplier has nothing to do with place of residence but is due to the lack of any family ties, no marriage, and no registered partnership (in case of a same sex couple).

https://www.zh.ch/de/steuern-finanze...Id=inheritance

https://www.zh.ch/de/politik-staat/g...01_01-071.html
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Old 31.08.2020, 08:04
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Re: Gift Tax and unexpected tax bill

Hi,



Thanks for your input and time..



Maybe i misunderstood the x6, but we are both talking about roughly the same amount of Tax. 86-90K



I would like to find away of postpone the tax payment until we sell the house when i retire in 12 years or basicaly find a way to delay the tax untill a later date.

Any idea why we have not been contacted for the gift tax when the gift was given?
The amount of tax you calculated, was this taking into account my partner as a Swiss or German resident ?


It has been suggested that we could use a "Darlehensvertrag" for the 400k. Would this allow us to kick the ball futher down the road to when we actually sell the house later and have lots of cash to settle all the due tax.


Do you know if this 86k could be paid to the Tax man over 5/6 years, is this possible?


Thanks for your input Graeme
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Old 31.08.2020, 08:14
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Re: Gift Tax and unexpected tax bill

Also, Swiss tax year depends on where she lived on 31 December.

Tom
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Old 31.08.2020, 11:08
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Re: Gift Tax and unexpected tax bill

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The amount of tax you calculated, was this taking into account my partner as a Swiss or German resident ?
I did not take it into account as there nothing to be taken into account. In case of a real estate the gift tax due is always the same regardless of residency. For non real estate gifts tax is only due when the receiver lives in the canton..

Or in other words: Why do you think the tax should be only ~15k? Who told you that or based on what information did you get this impression?

Once again the link to the tax calculator:
https://www.zh.ch/de/steuern-finanze...Id=inheritance


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Maybe i misunderstood the x6, but we are both talking about roughly the same amount of Tax. 86-90K
Gift tax is calculated like this:
Is canton ZH gift tax due? Yes. It is a real estate and it is not a gift to a child or spouse/registered partner.
If tax is due subtract free amount. -50k (if you have had lived for at least 5 years in the same houshold at the time the gift was made)
Calculate simple tax: 14.5k
Multiply simply tax with multiplier based on degree of relationship. In your case 6x as there is no relationship.

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Any idea why we have not been contacted for the gift tax when the gift was given?
I do not know. When did you do the gift tax declaration? You should have done it voluntarily and without being requested ASAP the gift was given.

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I would like to find away of postpone the tax payment until we sell the house when i retire in 12 years
That most likely won't be possible.
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Do you know if this 86k could be paid to the Tax man over 5/6 years, is this possible?
This might be possible if you ask nicely and communicate the issue in time. In the end they just wan't your best: Your money.

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It has been suggested that we could use a "Darlehensvertrag" for the 400k. Would this allow us to kick the ball futher down the road to when we actually sell the house later and have lots of cash to settle all the due tax.
The gift has been made. A loan contract (Darlehensvertrag) won't change that. But it could have been an option instead of a gift. An other option would have been marriage. No gift tax due on gifts between spouses.
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Last edited by aSwissInTheUS; 31.08.2020 at 11:30.
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Old 31.08.2020, 14:22
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Re: Gift Tax and unexpected tax bill

At the moment nothing has been declared as a gift or as a Darlehensvertrag,it is just noted down at the notary. It only became an issue now that we are filing our 2019 Tax returns.

It looks like we are learning about tax the hard way..
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Old 31.08.2020, 14:26
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Re: Gift Tax and unexpected tax bill

Thanks Tom.

nice bike, i have an ST4.
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Old 31.08.2020, 14:47
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Re: Gift Tax and unexpected tax bill

I don’t see how you’ll get around this, sorry to be of no help.

Though I have to ask why? Why would you gift her property when you knew she’d have to pay a vast chunk of tax on it (even if Swiss resident)? I mean your choice, but seems like paying tax for no reason!
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Old 31.08.2020, 14:55
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Re: Gift Tax and unexpected tax bill

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Or in other words: Why do you think the tax should be only ~15k? Who told you that or based on what information did you get this impression?
Probably like that:
Quote:
Calculate simple tax: 14.5k
Multiply simply tax with multiplier based on degree of relationship. In your case 6x as there is no relationship.
And using no (proper) multiplier.
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Old 31.08.2020, 14:55
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Re: Gift Tax and unexpected tax bill

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At the moment nothing has been declared as a gift or as a Darlehensvertrag,it is just noted down at the notary. It only became an issue now that we are filing our 2019 Tax returns.

It looks like we are learning about tax the hard way..
One problem is that you are late with declaring the gift. But if there were never a gift, nothing had to be declared.

Good thing that a loan contract is not bound to any form. It can be done verbally. But better when it is in written form. Important in a loan contract is the amount and by when it must be paid back. You would list the loan in your assets (good that you had not done the 2019 declaration yet) and your partner would list it as a debt on its return.

Now it would be tempting to reduce the loan every year by 50k (the tax free gift amount). But this can only be claimed once every 10 years, and the condition that you live in the same household still applies. The best you can do is to make a loan over 350k and treat the other 50 k as a tax free gift. Not sure if your have to report a gift bellow the tax free threshold or not.

In theory this gives you time to find a better solution for your problem. Such as marriage and forgiving the loan as gifts between spouses are not taxed. At least not in canton ZH. But it may come with pitfalls, such as there is now a loan, that the tax man might claim foul play, and the issue with double taxation if the gift is made in the future and the partner still resides in Germany.
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Old 31.08.2020, 14:59
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Re: Gift Tax and unexpected tax bill

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And using no (proper) multiplier.
The linked calculator forces you to chose a relationship to proceed with the calculation. The only relationship which gives a multiplier of 1x are the parents.
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Old 31.08.2020, 15:23
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Re: Gift Tax and unexpected tax bill

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Any idea why we have not been contacted for the gift tax when the gift was given?
It's your duty to tell them, how would the possibly know otherwise?
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Old 31.08.2020, 16:53
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Re: Gift Tax and unexpected tax bill

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The linked calculator forces you to chose a relationship to proceed with the calculation. The only relationship which gives a multiplier of 1x are the parents.
I understand, perhaps the OP saw a PDF table or something else as a source and just took that first number/tax percentage as the estimate.
But not smart from me to assume too much, I know.
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Old 31.08.2020, 22:46
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Re: Gift Tax and unexpected tax bill

I am just an ordinary guy trying to get ahead in life, 9-5 , pay my taxes and have some fun along the way. I had no idea that nearly 25% would disappear of my already paid tax on savings and wealth. That is criminal as far as i am concerend... As the morgage was secured by combining both our salaries, it only seemed fair that she has a share in the new property. The possible pending tax bill was over shadowed by the big picture of trying to secure the purchase of an amazing property for my family which in itself was stressful enough.
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Old 01.09.2020, 00:37
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Re: Gift Tax and unexpected tax bill

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As the morgage was secured by combining both our salaries, it only seemed fair that she has a share in the new property.
In that case there might not even be a gift to begin with. Or at least not a so big gift as you might think.

For example:
House purchase price 1M
200k paid by you in cash
800k mortgage, jointly liable by both partners,
House ownership according registry: 60 % you, 40% your partner.

There would be no gift.
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