The second-highest gift tax exemption may also be applied where the costs relating to the owner-occupied home have already been incurred.
Jubelton
This exemption is also known as the ‘jubelton’. This is because the exemption amounts to one ton (€100,000). And this exemption is widely celebrated. Incidentally, the amount of this exemption is now higher. Gifts made in 2019 are exempt up to €102,010.
Incidentally, the highest exemption under gift tax is the business succession scheme. We set out all the exemptions in our factsheet Gift tax exemptions.
Own home
One of the conditions for claiming the ‘jubelton’ is that the gifted amount must be spent on your own home for tax purposes. This may involve the purchase of the owner-occupied home, but also renovation or maintenance work on the property. You may also use the gifted amount to repay the loan used to finance the owner-occupied home.
Costs incurred in advance
The Gelderland District Court has recently decided that the exemption may also be applied where the costs relating to the owner-occupied home have already been incurred.
This case concerns a gift of €100,000 made by parents to their daughter. This sum was transferred on 16 December 2013. Prior to 16 December 2013, the daughter had paid €79,322 towards the cost of renovating her own home. After 16 December, she paid a further €28,040.
The Tax and Customs Administration applies the exemption to an amount of €28,040. However, the Court ruled that, on the one hand, proof of payment of the gift must be provided. And, on the other hand, it must be demonstrated that the costs relating to the owner-occupied home have been paid. A causal link is not required for the exemption. The Court therefore upholds the claim for the exemption in respect of the full €100,000.
An appeal?
The District Court’s judgement was handed down on 21 January 2019. This means that the time limit for lodging an appeal is still open. It stands to reason that the Tax and Customs Administration will ask the Court of Appeal whether the District Court’s judgement is correct.
Approvals
At the end of last year, a revamped decision was published regarding the application of exemptions under gift tax. This decision confirms that the write-off of a mortgage on one’s own home is also eligible for the higher exemption.
In addition, this decision stipulates that the age requirement is deemed to have been met if the beneficiary’s partner is under 40 years of age. After all, the ‘jubelton’ may only be utilised if the recipient is 18 years of age or older, but under 40 years of age.
Make sure you file your tax return before 1 March!
You must explicitly apply for most gift tax exemptions. You do this in the gift tax return. This must be submitted by 1 March of the calendar year following the one in which you received the gift. For gifts received in 2018, you therefore still have just over a month – namely until 28 February 2019.