For gifts which the donor uses for the purchase, improvement or maintenance of their own home, an exemption of no less than (well over) €100,000 applies (in 2020, due to indexation, this exemption already amounts to €103,643). The beneficiary must be over 18 and under 40 years of age and must claim the exemption in their gift tax return.
Proof
Should the Tax and Customs Administration so request, the beneficiary must, of course, be able to prove that the gift received was actually used to pay for the purchase, improvement or maintenance of their (for tax purposes) own home.
This burden of proof is, of course, met by providing invoices and receipts for these costs, as well as evidence that these costs were paid by the beneficiary.
Costs already incurred
What if the costs were incurred before the gift was received? This is the issue in a case in which the Arnhem-Leeuwarden Court of Appeal recently handed down a ruling. The Court ruled that a sequential link is not required. In other words: the costs do not have to have been incurred or paid after the gift was received.
However, the beneficiary must demonstrate that
- he or she already intended, at the time the costs were paid, to finance those costs from the gift yet to be received; and;
- the donor makes the donation (in part) for the purpose of achieving this objective.
Not sufficiently plausible
According to the Court, the interested party has not demonstrated this to a sufficient degree. The arguments rejected by the Court are:
- the donor (who has since passed away) had stated: “that the renovation would work out financially”;
- without (the prospect of) the donation, the renovation would never have gone ahead;
- there was a tradition of making donations (the Court notes, however, that a donation of €118,000 had already been received in the year in question);
- At the contractor’s request, the renovation was brought forward from 2014 to 2013;
- The fact that the interested party had a substantial current account debt with his private limited company does not in itself prove that he lacked the funds to have the renovation carried out.
The Court’s ruling concerns the temporary scheme as it stood in 2013 and 2014. This exemption came back into force on 1 January 2017.