Up to €100,000 can be donated free of gift tax until 1 January 2015, provided the donation is used for the donee's own home. After that, we will again rely on the “regular” exemptions for exempt gifts.
One such exemption concerns gifts to so-called “insolvent persons”. That is someone who is unable to pay his or her debts. The exemption requires that the donation enables the insolvent person to pay (part of) his or her debts with the donation.
A son appealed in vain to this exemption in respect of a gift from his parents in 2010 of €38,794. A 1985 Supreme Court ruling showed that only the amount needed by the donee to pay the part of his debts remaining after monetising his assets is exempt.
The assets of the son in question were positive. However, he argued before The Hague Court of Appeal that the actual value of the house was less than the WOZ value of €844,000, which meant that his assets were still negative. However, the court found that the interested party had not shown that his debts required urgent payment (a mere finding that the donee's assets were negative is not sufficient). Moreover, according to the court, a value other than the WOZ value was not at issue because the WOZ value had been determined on reference date 1 January 2009 and therefore applied during the 2010 tax year.
Incidentally, anyone who still wants to claim the temporary exemption of up to €100,000 for gifts relating to their own home must not only ensure that the gift was completed before 1 January 2015, but also that the gift was actually spent on their own home before 1 January 2015.
(The Hague Court of Appeal, 23 March 2014, no BK13/00269)