In our factsheet Gift tax exemptions In this factsheet, we describe the most common types of gifts. Every year, we update this factsheet with the amounts applicable for the current year. However, there are also exemptions that are invoked less frequently. A few of these were discussed in two recent cases before the Court of Appeal in The Hague.
ANBI
Both donations to an ANBI and donations made by an ANBI are exempt from gift tax. There is no upper limit on this exemption. The abbreviation ANBI stands for: Algemeen Nut Beogende Instelling (Public Benefit Organisation). This status is granted to an organisation by the Tax and Customs Administration. This is set out in a decision. The organisation is then included in the ANBI register.
A foundation that had written off debts brought a case before the Court of Appeal in The Hague. This foundation had ANBI status, but this had been revoked by the Tax and Customs Administration. The write-off of a debt, other than for purely commercial reasons, qualifies as a gift. However, a donation made by an ANBI would be exempt, regardless of the recipient.
The poor and the destitute
As a result of losing its ANBI status, the foundation must seek a different exemption. The exemption for other recipients amounted to €2,092 (the remission took place in 2014; for 2019, this exemption amounts to €2,173). Given that the remission in one case As the amount is €8,000, gift tax must be paid on €5,908. The rate is 30%. The tax assessment therefore amounts to €1,772 in gift tax. This is subsequently reduced to €1,144 when it transpires that the gift was made not to one, but to two beneficiaries (€4,000 each).
To this end, the exemption for gifts to “the poor and those of limited means” is invoked. Two conditions apply to this exemption:
- the beneficiary must not be able to pay his or her debts;
- and the gift must serve to enable the beneficiary to do so.
It appears that the beneficiaries have bank balances which, as at 1 January 2014, amounted to €21,626 and €71,914 respectively. They have failed to convince the Court that they have such (other) debts, due for payment in the short term, that they are unable to repay their debt to the foundation.
Repayment by car
In the other case This involves a waiver of €5,360. The beneficiary’s assets amount to €1,696, consisting of a bank balance of €946 and a car valued at €750. The exemption for acquisitions by persons of limited or no means cannot be applied to this amount. The Court did not accept the argument put forward by the donee that she cannot do without the car. The gift tax due amounts to: 30% of €1,696 = €508.
Tax levied on the donor
In these cases, the Tax and Customs Administration imposes the gift tax assessment on the donor (the foundation). That seems a little strange. After all, for the purposes of gift tax, it is the receipt of a gift that constitutes the taxable event, not the making of the gift. In general, therefore, the tax assessment is issued to the donee.
The situation is different when the donor pays the gift tax themselves. However, this is not the case in the situations described above. The donor receives the gift tax return and assessment because the Tax and Customs Administration does not know who received the gift(s). The law provides for this possibility.