To transfer assets, it is often interesting to make gifts in the form of debt acknowledgement every year. Then you have to go to the notary every year. Or don't you?
Acknowledgement of guilt
Donation in the form of debt acknowledgement is chosen when the donor does not have sufficient liquidity to donate cash or does not (yet) want to use the available cash to do so. The donor then declares a debt to the donee.
Gift under acknowledgement of debt only works for inheritance tax purposes if the gift is recorded in a notarial deed.
Benefit every year
Gifts to children are subject to an exemption (this exemption is for 2021: € 6.604). An exemption can also be availed of for gifts to grandchildren (and all other acquirers) (this exemption is for 2021: € 3.244).
Another reason to donate annually is due to the inheritance and gift tax rate. This is because (in 2021) for the acquisition (above the exemption) up to €128,751: 10% and for the acquisition above this amount 20%. These are the rates for gifts to children. Grandchildren pay 18% and 36%.
Repetitive donations
These exemptions and the rate step-up can be reused every year. Then, of course, donations must be made every year. For gifts in the form of indebtedness, this means an annual visit to the notary.
The obvious solution is to arrange in one notarial deed that guilty is recognised for a series of years (a recurring gift). But of these, the Inland Revenue takes the position that they should be seen as one donation, taxed in the year the notarial deed is executed.
Loose notarial deeds
Recently played for Court of Appeal of ’s-Hertogenbosch a slightly different situation. This involved five separate notarial deeds. One in which the donation was settled for the year in question. And 4 in which the donations for each of the following 4 years were recorded, under the condition precedent that the donor was still alive at the time of the donation.
The court upheld the court's opinion that these five donations should not be considered as one. Five separate legal acts created five separate donations. Due to the condition precedent, the donations are taxed in the year in which the condition is met.
It is obvious that the Inland Revenue sees the case as a matter of principle and refers it to the Supreme Court.