How are gift transfers from parents in my home country taxed in Germany?

Q: How are gift transfers from parents in my home country taxed in Germany?

Understand how Germany taxes gifts received from abroad, the tax-free allowances for family members, and how to report them to the Finanzamt.

As a German tax resident, you are subject to gift tax (Schenkungsteuer) on worldwide gifts you receive : even if the gift comes from abroad and is transferred in your home country’s currency.
German tax law applies based on either the recipient or donor being a German tax resident at the time of the gift.

Quick Answer

Gifts from parents to children have a €400,000 tax-free allowance per parent, renewable every 10 years.
Amounts above the allowance are taxed at 7–30% depending on value.
Gifts must be reported to the Finanzamt within 3 months of receipt : even if no tax is due.
The tax is based on the EUR value at the date of transfer, not the amount after currency conversion.

1. Who is taxed and when?

Germany applies gift tax if:

Recipient is a German tax resident (regardless of donor’s location), OR
Donor is a German tax resident (regardless of recipient’s location).

If both are outside Germany at the time of the gift, German gift tax usually does not apply.

2. Allowances for family members

For parent → child gifts:

Tax-free allowance: €400,000 per parent.
Example: If both parents gift you €400,000 each in one year, €800,000 total can be received tax-free.

Other relationships:

Spouses: €500,000 allowance.
Grandparents to grandchildren: €200,000 allowance.
Unrelated persons: €20,000 allowance.

Allowances reset every 10 years.

3. Reporting the gift

Even if the gift is below the allowance:

File Form “Schenkungsteueranzeige” with your Finanzamt within 3 months.
Provide:
- Donor’s details and relationship.
- Amount and currency.
- Date of transfer.
- Bank statements and gift agreement (if available).

4. Currency conversion

Convert the gift amount to EUR using the ECB exchange rate on the date the funds are received.
For property or assets given abroad, determine market value in EUR.

5. Tax rates above allowance

Taxable amount (after allowance) is taxed progressively:

€0–€75,000: 7%
€75,000–€300,000: 11%
€300,000–€600,000: 15%
Higher bands: up to 30%.

Example: Parent gifts you €500,000.

Allowance: €400,000.
Taxable: €100,000.
Tax rate: 11%.
Tax due: €11,000.

6. Common pitfalls

Not reporting the gift because “it’s from my parents” : still mandatory to notify the Finanzamt.
Receiving large gifts in multiple smaller transfers without documentation : may raise AML flags.
Forgetting the 10-year allowance reset rule.

7. Practical example

In 2025, your father in India gifts you ₹50,000,000 (~€550,000).

EUR value at ECB rate: €550,000.
Allowance: €400,000.
Taxable: €150,000.
Tax rate: 11% (Tax Class I — parents to children; €75,001–€300,000 bracket) → €16,500 tax due in Germany.
You must declare the gift and pay the tax within 1 month of assessment.

Checklist

Confirm your allowance and relationship category.
Convert the gift value to EUR at ECB rate.
File the gift notification within 3 months.
Keep transfer proof and donor details.
Plan large gifts to optimize use of 10-year allowance periods.

Disclaimer

⚠️ IMPORTANT LEGAL DISCLAIMER:

This content is for educational and informational purposes only and does not constitute financial, tax, legal, or investment advice. You should not rely on this information as a substitute for, nor does it replace, professional financial or tax advice. Always consult with qualified professionals (tax advisors, financial planners, lawyers) before making any financial decisions or taking any actions based on this information.

Disclaimer: This is general information and may differ for individual cases. Learn more about financial planning with Financemate in a discovery call. Gift tax planning often benefits from legal structuring : consult a tax advisor for large or complex transfers.