Gifts and Gift Tax in Germany (Schenkung and Schenkungsteuer) Explained

German gift tax, Schenkungsteuer, is not a separate tax from inheritance tax. Both are governed by the same statute, the Erbschaft und Schenkungsteuergesetz, and a lifetime gift (Schenkung) uses the same tax free allowances under § 16 ErbStG and the same rate table under § 19 ErbStG as an inheritance does. What changes with a gift is timing, and timing is exactly why gift planning matters so much in Germany.

This page explains what counts as a taxable gift, the family home exemption between spouses during life, the usufruct technique that reduces the taxable value of a gifted asset, the civil law rules on promising and reclaiming a gift, and the ten year rule that both the tax office and other heirs can use against a gift made before death. For the allowances and rate table themselves, see German inheritance tax.

Information last verified on 19 July 2026. This page provides general legal information and does not constitute legal advice in an individual case.

Gift tax and inheritance tax are the same law

Germany does not have two separate tax codes for gifts and inheritances. The Erbschaft und Schenkungsteuergesetz covers both, and a gift made during life (Schenkung unter Lebenden) is taxed using the identical tax classes, the identical allowances under § 16 ErbStG, and the identical rate bands under § 19 ErbStG that apply to an inheritance. A spouse who receives a lifetime gift has the same 500,000 EUR allowance a spouse would have on inheritance; a child has the same 400,000 EUR.

The practical difference is not the rate or the allowance. It is that a gift happens on a date the giver chooses, while an inheritance happens on a date nobody chooses. That single fact is why lifetime gifting is the main planning tool available under German law, and it is the reason this page exists separately from the inheritance tax page.

What counts as a taxable gift: § 7 ErbStG

§ 7 ErbStG defines a taxable gift broadly, as any gratuitous transfer between living people where the recipient is enriched at the giver's expense. This covers the obvious case, simply handing over money or property, but it reaches further.

A mixed gift, where the recipient pays something but clearly less than the asset is worth, is taxed on the difference between the price paid and the real value. A gift made subject to a condition or a duty placed on the recipient (an Auflage) is still a gift for tax purposes; structuring a transfer as a sale with a token price, or attaching strings to it, does not take it outside the tax. Certain transactions inside a company, such as a disproportionate profit share for one shareholder or a value shift caused by another shareholder's contribution, can also count as a gift between the shareholders involved.

The ten year rule: § 14 ErbStG

§ 14 ErbStG is the provision that makes timing matter. It adds together every gift a beneficiary received from the same person within a rolling ten year window and taxes the combined total as one transfer, using one allowance and one rate. Tax already paid on the earlier gift or gifts is then credited against the tax on the combined sum, so nothing is taxed twice, but the allowance itself is not renewed until a full ten years have passed since the earliest gift still inside the window.

This is the entire logic behind staged lifetime giving. A parent who wants to pass wealth to a child tax efficiently gives an amount up to the child's 400,000 EUR allowance, waits for ten years to fully pass, and then gives again up to the same allowance, now refreshed. Given early enough, and spaced out for long enough, a parent can move several allowances worth of wealth to a child across a lifetime with no tax at any stage, something that is not possible with a single inheritance on death.

Worked example: two gifts ten years apart

Say a parent gives a child 400,000 EUR today. The child's allowance under § 16 ErbStG is exactly 400,000 EUR, so nothing is owed. If that same parent dies or gives again within the following ten years, § 14 ErbStG adds the new transfer to the 400,000 EUR already given, and the child's allowance has already been used, so the new transfer is taxed close to its full value from the first euro.

If instead the parent waits until more than ten years have passed since the first gift before giving again, the ten year window on the first gift has closed. The child's 400,000 EUR allowance is available in full against the second gift, exactly as if the first gift had never happened. Two gifts of 400,000 EUR, spaced more than a decade apart, can therefore move 800,000 EUR to one child with no inheritance or gift tax at all, compared with a single 800,000 EUR transfer, which would leave 400,000 EUR exposed to tax after the allowance.

The family home between spouses: § 13 Abs. 1 Nr. 4a ErbStG

Married couples and registered life partners get one exemption that has no ten year clock at all. § 13 Abs. 1 Nr. 4a ErbStG lets a spouse transfer ownership or co-ownership of the family home to the other spouse completely tax free, at any point during the marriage, including covering the cost of buying or building it and taking over related debt. Unlike the exemptions for a surviving spouse or children on inheritance, this lifetime version carries no later clawback if the couple stops living there.

This makes the family home the one asset couples can freely move between each other for estate planning purposes without touching either spouse's general allowance or waiting out any window. It is commonly used together with staged gifts of other assets to make the most of both spouses' separate allowances toward children.

Reducing the taxable value with a retained usufruct (Nießbrauch)

A Nießbrauch is a right to use an asset and keep its income, most often reserved by a parent who gives away a rental property or an investment account but keeps the right to the rent or the interest for the rest of their life. For gift tax purposes, the value of that retained right, its Kapitalwert, is calculated under §§ 13 to 16 BewG using the annual value of the right and a multiplier based on the holder's life expectancy, and it is subtracted from the value of the gift.

The effect is that a gift made with a retained usufruct is taxed on a smaller figure than an outright gift of the same asset, sometimes well below the recipient's allowance where a straightforward gift would have exceeded it. The tradeoff is that the giver keeps the income and the recipient does not get full use of the asset until the usufruct ends, so this is a technique for combining tax planning with an ongoing need for the income, not simply a way to avoid tax on an asset the giver is finished using.

Promising a gift: § 518 BGB

A bare promise to make a gift in the future, without handing anything over yet, generally needs notarisation to be legally binding under § 518 BGB. An informal promise, such as a written note or a text message promising a sum of money later, is not enforceable on its own.

The formal requirement disappears once the promised gift is actually carried out. § 518 Abs. 2 BGB cures the missing notarisation the moment the gift is delivered, so a completed gift is valid even where the original promise was never put in front of a notary. This matters mainly for disputes over promises that were never carried out; once money or property has actually changed hands, the lack of notarisation on the original promise stops being relevant.

Reclaiming a gift: § 528 BGB

German law allows a donor to claw back a gift already given if the donor later becomes unable to cover their own reasonable living costs or their legal maintenance obligations to close relatives. § 528 BGB gives the donor a claim against the recipient for return of the gift, valued under unjust enrichment principles, once that impoverishment sets in.

The recipient has a way out that does not involve giving the asset back: paying the donor what the donor needs to meet those living costs instead. Where several gifts were made to different recipients over time, the earliest recipient is only on the hook if a later recipient cannot cover the shortfall. This provision comes up most often where an older parent gave away substantial assets and later needs long term care they can no longer afford, and a care provider or the state steps in to pursue the claim on the parent's behalf.

Gifts and the compulsory share: § 2325 BGB

A gift made before death interacts with German law in a second way that has nothing to do with tax. § 2325 BGB lets a person entitled to a compulsory share (Pflichtteil), typically a child or spouse who was left out of a will or given less than their statutory share, add the value of gifts the deceased made in the ten years before death back into the notional estate used to calculate that share.

The addback is not all or nothing. A gift from the year before death counts in full; each additional year that has passed reduces the amount counted by one tenth, so a gift from nine years before death counts for only about a tenth of its value, and a gift from more than ten years before death is ignored completely for this purpose. Where the gift went to the deceased's own spouse, this ten year clock does not even start running until the marriage itself ends, so a gift between spouses can be added back regardless of how long ago it was made.

It is easy to assume this is the same ten year rule as § 14 ErbStG, since both use ten years and both look at gifts before death, but they are different rules serving different purposes. § 14 ErbStG recalculates a tax bill for the recipient of the gift. § 2325 BGB recalculates what other heirs are owed, regardless of who received the gift or what tax, if any, was paid on it. A gift can fall outside the tax rule's window and still be pulled back into a compulsory share claim, or the reverse, and planning around one of these rules without checking the other is a common and expensive mistake.

Reporting a gift to the tax office

The same reporting duty that applies to inheritances applies to gifts. § 30 ErbStG requires the recipient, and separately the giver, to notify the responsible Finanzamt in writing within three months of the gift. A gift that a notary has already certified, for example a notarised transfer of real estate or of a company shareholding, generally does not need a separate report, since the notary's own filing already reaches the tax office.

Missing this window does not remove the underlying tax liability and can expose both sides of the gift to separate penalties, so it should be treated as a firm deadline even for a gift that everyone involved assumes falls comfortably under the recipient's allowance.

Related reading: German inheritance tax, writing a will in Germany, intestate succession, the compulsory share, and disclaiming an inheritance. For a wider view of the legal system, see German law explained.

Frequently Asked Questions

Is German gift tax different from inheritance tax?

No. Both are governed by the same statute and use the same allowances under § 16 ErbStG and the same rate table under § 19 ErbStG. The difference is timing, not the rules that apply once a transfer happens.

How often can I use my tax free allowance for gifts?

Once every ten years per giver, under § 14 ErbStG. Gifts from the same person within a rolling ten year window are added together and share one allowance, so the allowance effectively refreshes only after a full decade has passed since the earlier gift.

Can my spouse give me our house tax free while we are both alive?

Yes. § 13 Abs. 1 Nr. 4a ErbStG exempts a family home transferred between spouses or registered partners at any point during the marriage, with no size limit and no ten year clock, unlike the exemptions that apply on inheritance.

What is a Nießbrauch and why does it reduce gift tax?

A Nießbrauch is a retained right to use a gifted asset and keep its income, often reserved by a parent gifting a rental property. Its capitalised value is subtracted from the value of the gift for tax purposes, which lowers the taxable amount compared with an outright gift of the same asset.

Do I need a notary to promise someone a gift?

A bare promise to make a gift later generally needs notarisation under § 518 BGB to be enforceable. Once the gift is actually handed over, the lack of notarisation on the original promise no longer matters, because delivering the gift cures the missing form.

Can a gift be taken back later?

A donor who later cannot cover their own reasonable living costs can generally reclaim a gift already made under § 528 BGB, though the recipient can avoid returning it by covering the donor's needs instead.

Is the ten year rule for gift tax the same as the ten year rule for the compulsory share?

No, even though both use ten years. § 14 ErbStG recalculates the tax bill for the person who received the gift. § 2325 BGB separately lets other heirs add gifts back into the estate for their compulsory share, on a sliding scale, regardless of any tax paid on the gift.