Monetary Gift from my mother in Germany

Discussion in 'Wills, inheritances and gifts' started by Merlin, Jan 3, 2017.

  1. Merlin

    Merlin Frequent Poster

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    Hi there,
    Once again I'm turning to you with a question, hopeful that you will be of help as so often in the past.

    I hold German and Irish cititzenship (not sure if that matters), am currently unemployed (redundancy) and am considering to start my own business in the hospitality sector. As I will be unable to obtain a mortgage due to my current status my mother (who is a German resident) has offered to invest in me and gift me 100K.
    My assumption would be that any tax liabilities would be due in Germany and not here in Ireland ?
    What about money laundering laws applicable in this case if she was to transfer this money to my bank account in Ireland ?

    Obviously she will discuss this with her bank in Germany but I wanted to find out how this would work from this end ?

    thank you
    Irina
     
  2. cremeegg

    cremeegg Frequent Poster

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    1,317
    Your mother should loan you the money, with a properly drawn up loan agreement, including the interest payable.

    Your mother can gift you the interest each year, so that you don't have to pay her. If this in less than €3k each year, then it has no Irish tax implication at all. I know nothing about German tax but a loan is unlikely to be of interest to the German ax authorities either.

    €100k of equity in a new business is a bad idea.
     
  3. Merlin

    Merlin Frequent Poster

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    100
    Thank you Cremeegg,

    My mother is 78 so I'm not sure the loan thing would work out in the long term. Thanks also for your advice re. the investment I understand that I would be taking a risk but there is no other way around it and surely taking out a mortgage would be even worse even if that was possible.

    Irina
     
  4. ck4567

    ck4567 New Member

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    Last edited: Jan 4, 2017
    The main tax liability would be due in Ireland, where you are a tax resident and receiving the gift.

    If my understanding of the situation is correct, you should not be liable to any tax in Ireland. You are receiving €100k, when the current CAT gift/inheritance threshold from parents is €310k. If you receive a further gift/inheritance, you will have to pay CAT on anything above the applicable threshold at the time and the €100k you receive now will count towards is. If you are expecting a big inheritance, it might be worth seeing what other solutions there are.

    I cannot see what tax liability your mother would face in Germany for gifting you €100k. From a quick google, if you were resident in Germany, you would also be under the applicable threshold (€400k).

    I imagine Revenue could ask for justification on the source of the money.

    That is a simple assessment. A professional might have a more tax savvy solution depending on the situation and objective?
     
    Last edited: Jan 4, 2017
  5. Merlin

    Merlin Frequent Poster

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    100
    Thanks ck4567! That is good information. If I wanted to consult a professional what am I looking for here one of the big firms or are there independents one could consult ?

    I will eventually inherit our house in Germany and more than likely will not keep it.

    Irina
     
  6. ck4567

    ck4567 New Member

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    3
    House + cash, you could well end up beyond the €310k threshold pretty quickly (though the 310k has been growing in recent years). The relevant €400k German threshold will also apply (since the house/money/etc. is in Germany). At the Irish end, you would be taxed at 33% on anything above €310k.

    I am also looking for a professional to answer these kinds of questions, so sorry I can't be of more help there.
     
  7. Merlin

    Merlin Frequent Poster

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    100
    Thanks a mill ck4567,
    If I find out I'll let you know will contact a few accountant friends to see if they have any advice