In our article Gift tax exemptions and in our (End-of-year) tips for 2015 we have told you about the large exemption of €100,000 which from 1 January 2017 will be introduced into the gift tax (the “jubelton”). The bill (Tax Plan 2016), which sets out these provisions, has now been passed by the House of Representatives. It is not yet certain whether this bill will also be able to pass the Senate. Should the bill, contrary to expectations, be blocked in the Senate, the “jubelton” will unfortunately not go ahead either.
The exemption may be applied if the beneficiary is aged 18 or over, but under 40. The amount gifted must be used for the purchase or maintenance of the beneficiary’s own home or for repaying the mortgage on that home. The exemption is not limited to gifts from parents to children. The exemption also applies when an uncle or aunt, a grandparent or any other third party makes a gift.
Prior to the adoption of the bill, the fourth Amendment Memorandum stipulated that the exemption does not, after all, have to be utilised in full within the same calendar year. The exemption may also be used in the two calendar years following the year in which the first part of the exemption is utilised. A claim for the exemption must be made in the gift tax return for that year. The exemption is then automatically spread over the following two years in which it is utilised.
The importance of being able to spread the exemption lies in the fact that penalty-free repayments on loans for a principal residence are often only possible up to a limited amount. Now that the exemption may be spread over three calendar years, the gifts can be distributed in such a way that the recipient can use the amounts received to make penalty-free repayments on their home loan (as much as possible).