End of time for parental benefits and donations

Time is running out for them taxpayers who are in danger of being caught in the trap of items and they want to cover them in order to get rid of her payment extra wearer for income of 2020.

In the battle with taxes and presumptions parents benefits and donations prove to be lifesavers, as they can reduce or even reduce the tax burden.

Thus, those who in 2020 bought a car or acquired another assets data and want to invoke sums of money received from parents, siblings or third parties in order not to be trapped in the presumptions should hurry.

The deadline for parental benefits and donations for 2020 expires on Friday 26 February.

Within next four days Inheritance tax, donation and parental benefit tax returns should be sent to the Tax Office by email, post or courier, the submission deadline of which was within November or December 2020 as well as the declarations within which the three-month deadline for submitting an application for extension expired, regardless of whether it has been submitted.

By filing donations or parental benefits, taxpayers can clear tax charges.

The legislation stipulates that the sums of money given by various relatives (parents, grandparents, siblings, etc.) or third parties to a taxpayer, then the donor, ie the one who receives the monetary how much, may use this amount to cover the cost of acquiring assets, provided that the donation or parental benefit is completed within the tax year in question.

However, because the possibility of completing the relevant operations has been extended until February 26, 2021, those that have been done after January 1, will “count” normally to cover the presumptions of the year 2020.

With the money that they receive children from their parents or grandparents can cover the presumption of buying a car or other property or even the first home, but also avoid the tax trap with the presumptions of living that include the homes, cars, tuition at private schools and even loan installments paid monthly to the bank.

The presumptions of living and acquiring assets are cumulative and taxpayers will have to show higher incomes in order not to be trapped in them.

If parents give money to their children to buy a car then the parental benefit of the amount of money is taxed at a rate of 10% and even from the first euro. But if the children acquire first residence with «dowry»The tax is zeroed for amounts up to 150,000 euros. Thus, in case the father gives his daughter the amount of 5,000 euros for the purchase of a car, then the specific parental benefit will be charged with a tax of 500 euros (5,000×10%). But if the father helps his daughter to buy first home, giving her 50,000 euros will not be charged even one euro.

Cash donations from parents to their children for purchase first residence are tax-free for amounts up to 150,000 euros while for larger amounts a tax is imposed with scaled rates from 1% to 10%.

This measure is a golden opportunity for real estate market, which is being tested by the effects of the pandemic. The only condition is the proof of the purchase of the first home by the children, while the parents must justify the legal origin of the money.

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