A father donates certificates worth millions to his children in January. This is later confirmed in a notarial deed in April. According to the Inland Revenue, the donation only took place at that time. The notary confirms that the donation already took place verbally on 24 January 2018. The discrepancy means a hefty after-tax bill. The court has to get involved to answer the question of when exactly the donation took place.
What was at play?
A father holds shares in two private limited companies through his holding company. He sells these shares on 24 January. Part of the purchase price consists of shares in another bv. That same day, father sets up a foundation to which he resells the shares he received. The foundation issues depositary receipts, which the father gifts to his three children. The son files a gift tax return in September for an amount of €2.7 million, with the gift date being January 24. With the tax return he attaches a notarial deed dated 17 April, in which the notary confirms that the donation took place orally on 24 January. The tax authorities impose an assessment in accordance with this return.
Tax authorities turn around after investigation
Years later, another inspector investigates the million-dollar transaction. He comes across an earlier deed dated 13 April, which states that the father holds all the certificates. The inspector concludes that the gift was not made in January but only in April when the deed was notarised. The value of the certificates then increased. The son has to pay a new assessment on €9.3 million instead of €2.7 million.
Notary had advance instructions
The court dismissed the inspector's argument that, according to the deed of 13 April, the father still held all the certificates. The unfortunate wording in this deed does not prevent the donation from having already taken place on 24 January. The notarial deed of 17 April explicitly states that the offer of donation was made on 24 January and accepted by the children. The deed states exactly which certificates were gifted to which child on that date. Crucially, there is an email dated 18 January in which the notary receives instructions via a roadmap for the documents to be prepared. This proves that the donation had already been prepared before 24 January. The court sees no reason to doubt the accuracy of the notarial statement. Also, the complexity of the transaction does not mean that oral donation is impossible.