Gift tax in marriage. Have you ever considered the gift you gave your partner for the birthday or any day are subject to gift tax?
Gift tax in marriage?
Neither have we, but the Dutch tax office has a totally different opinion. Their opinion is so strong. Now the high court stated to fully disagree with their opinion, the tax office is lost for words.
Gift tax in marriage – court case
The court case does not state the ages of the persons involved. We happen to know that the man was rather old and rich and the woman much younger and not rich. Very sorry for this rather typical traditional dream situation for some men and some women.
The man and wife created terms of the marriage before the marriage was executed. In these terms the wife would gain no part in the inheritance of the man in case of a divorce, and vice versa. During 2008 they married and the husband opened a joint bank account and a joint share account. In the joint bank account he deposited 10 mln euro. In 2012 he died.
The tax office took the standpoint that the EUR 10 mln was in fact a gift for 50% to the wife. Hence they made a claim of gift tax over EUR 5 mln. In 2012 the gift tax rate was 20% for partners, hence the tax office claimed EUR 1 mln gift tax.
The wife went to court to argue that money or goods going back and forth in a marriage cannot be regarded a gift. The courts up to and including the high court agreed. A marriage is engaged for all kind of reasons, but avoiding gift tax is not one of them.
Moreover, the balance of the bank account could have been consumed by them together or the husband could have out lived the wife. In other words, the balance of the joint account could never have been predicted at the moment of death of the husband. That is required, in order to meet ‘the will to give’ requirement, for a gift.
Gifts between partners
In the situation one partner earns the income and the other does not. The items purchased such as clothing and what have you, are not considered as receive a gift from the working partner. Nor does the working partners see this as a gift, but as costs of the household.
To put it more simple. The money going back and forth in a marriage is never thought of by anyone as a taxed situation. The money is meant to operate the household and other aspects in the marriage.
The difference for the tax office to be triggered this time is the age and the amount involved.
Tax is exciting
The above situation in which partners would like to allocate some aspects between each other. It is important to actually be or remain tax partners. In the year of divorce there is a choice offered by the Dutch tax office to remain the full year tax partner. Even if you were divorced during the year. The separation in which one gets the house and the other the dog is than done from a tax point of view the most friendly manner.