Clarification on gift tax between partners

[ftac]

Hallo everyone


I recently moved to Finland and my partner will soon move here too. I am a bit concerned about the gift tax laws.

What I understood from the Vero website is that they are applicable also between partners (e.g. if I buy a house paying it 100% but my partner receives 50% she must pay gift tax, similarly if I give her money or stocks or a car etc.), but maintenance is excluded (e.g. if I pay the rent, or the grocery store bills, or clothes, etc., on behalf of my partners she does not have to pay gift tax).

My question is, what about things that do not clearly transfer property (clearly subject to gift tax), but are not so clearly "maintenance° (clearly not subject to gift tax)? For example if I buy plane tickets, or holidays, for my partner, is she then liable to pay gift tax? (If above the limit of 5000 euros in 3 years).


Thanks to anybody who would be able to help!

[betelgeuse]

I recently moved to Finland and my partner will soon move here too. I am a bit concerned about the gift tax laws.

What I understood from the Vero website is that they are applicable also between partners (e.g. if I buy a house paying it 100% but my partner receives 50% she must pay gift tax, similarly if I give her money or stocks or a car etc.), but maintenance is excluded (e.g. if I pay the rent, or the grocery store bills, or clothes, etc., on behalf of my partners she does not have to pay gift tax).

My question is, what about things that do not clearly transfer property (clearly subject to gift tax), but are not so clearly "maintenance° (clearly not subject to gift tax)? For example if I buy plane tickets, or holidays, for my partner, is she then liable to pay gift tax? (If above the limit of 5000 euros in 3 years).

She is. This article is somewhat outdated but applies on the holiday point still.

https://www.is.fi/taloussanomat/oma-rah ... 09056.html

[ftac]

Thank you. What if the holiday is paid for from a joint bank account? Would the tax authorities check that we had paid exactly 50% into it?

Or is it essentially forbidden to go on holidays when there is a wealth disparity (lest one needs to pay a gift tax)? Sounds a bit harsh...

[betelgeuse]

Thank you. What if the holiday is paid for from a joint bank account? Would the tax authorities check that we had paid exactly 50% into it?

That's what I would do if I was investigating.

Or is it essentially forbidden to go on holidays when there is a wealth disparity (lest one needs to pay a gift tax)? Sounds a bit harsh...

Would you say that paying VAT makes it forbidden to go on a holiday?

[ftac]

If I pay the gift tax itself on behalf of my partner, would it trigger a gift tax on the gift tax?

If the answer is no, then your comparison with VAT is appropriate, but otherwise it is not. My point is that, if my partner cannot afford paying the gift tax (or her part of the holiday), this rule would mean we are forbidden to go for a holiday together. I personally find this harsh.



Anyway, sorry, that is just my opinion but I did not mean to start a discussion. Thank you for the information.

[betelgeuse]

If I pay the gift tax itself on behalf of my partner, would it trigger a gift tax on the gift tax?

Yes because the partner is liable for the tax.

If the answer is no, then your comparison with VAT is appropriate, but otherwise it is not. My point is that, if my partner cannot afford paying the gift tax (or her part of the holiday), this rule would mean we are forbidden to go for a holiday together. I personally find this harsh.

You can, for example, calculate the donation so that it covers both the holiday and the gift tax due. Part of the donation you can put to a common account / card to pay for the trip and part wire transfer to your partner in order that she can pay the taxes.

[betelgeuse]

If nothing else, your partner should have some income from benefits. As you can pay most of the daily costs without gift tax, she should have plenty of money to pay for holidays. Of course only the sky is the limit when there is plenty of money to spend. However, in such a situation being liable for some gift tax while spending benefits on travel, seems just to me.

[ftac]

I apologize for having started to express opinions, I regret this as it has taken us astray.

I believe that you are right in the case of a holiday, or any other asset, that my partner enjoys completely by herself. I found with some more research that this is in fact stated on the official Vero website (there are certain exceptions: maintenance, gifts under 5000 euro/3 years, household items). From the same website, however, I also read that in the case of a holiday (or any other thing) that benefits both spouses together, and is paid with a joint account, things are different. They explain that this is allowed and does not trigger gift tax.

Sorry that I did not make it clear in my first post that I was not thinking of a holiday (or other things) for her personal benefit, but instead a family holiday (or other benefits to be shared and not for her personal use only).


I think I will get in touch with Vero directly and double check this, so we do not risk to make mistakes. In the worst case, I agree that at least I could offer to pay all, or almost all, the daily costs. You are right that this would create the possibility for my partner to pay 50% of the holiday costs without any extra tax due, while still getting helped by me.

In the meanwhile, thank you very much for your help betelgeuse.

[betelgeuse]

I believe that you are right in the case of a holiday, or any other asset, that my partner enjoys completely by herself. I found with some more research that this is in fact stated on the official Vero website (there are certain exceptions: maintenance, gifts under 5000 euro/3 years, household items). From the same website, however, I also read that in the case of a holiday (or any other thing) that benefits both spouses together, and is paid with a joint account, things are different. They explain that this is allowed and does not trigger gift tax.

The text on the Vero website is a bit misleading in my opinion. This interpretation has no basis in the legislation.

https://www.finlex.fi/fi/laki/ajantasa/ ... 0378#L3P19

[ftac]

I would not say that the legislation gives a clear basis to your interpretation either. For example, paragraph 18 talks of property donated (if I understand correctly the Finnish) to define when gift tax is due.

My impression is that we are talking of a borderline situation (something that does not transfer property of anything, and is enjoyed by all family members: to me, it is not clear at all that this is a donation as defined by the legislation). Arguably, it could be seen in both ways.
Moreover, if you were right, then gift tax would be due also whenever a parent brings their children to an expensive holiday and pays for it (usually, young children do not own much money to pay for holidays or for gift taxes). To me, this honestly sounds like an excessively strict interpretation.



Personally, I will be careful and follow your interpretation. In practice, however, it seems to me that if Vero writes a certain interpretation on their official website, hopefully that is how they do things in practice. It would be extremely worrying if they wrote misleading things, would it not?

[betelgeuse]

I would not say that the legislation gives a clear basis to your interpretation either. For example, paragraph 18 talks of property donated (if I understand correctly the Finnish) to define when gift tax is due.

My impression is that we are talking of a borderline situation (something that does not transfer property of anything, and is enjoyed by all family members: to me, it is not clear at all that this is a donation as defined by the legislation). Arguably, it could be seen in both ways.
Moreover, if you were right, then gift tax would be due also whenever a parent brings their children to an expensive holiday and pays for it (usually, young children do not own much money to pay for holidays or for gift taxes). To me, this honestly sounds like an excessively strict interpretation.

Personally, I will be careful and follow your interpretation. In practice, however, it seems to me that if Vero writes a certain interpretation on their official website, hopefully that is how they do things in practice. It would be extremely worrying if they wrote misleading things, would it not?

Gift tax has a situation in which de facto and de jure situations differ. It’s based on an honor system since the tax authority does not monitor bank accounts. For children gift tax is due but it’s quite common that people are not aware and the tax authority is not actively enforcing.

[Piet]

So if I read above correctly,

Hypothetically: does this mean that if I go on my knees to a beautiful lady and ask her to marry me while I offer her a diamond ring of 15995 € (when not on sale, see picture), she will have to sell it to be able to pay the gift tax if she has no money to pay for the taxes.

She is not married to me yet, so she has to pay tax following bracket 2 => 19% of the free exceeding part = 15995 -5000 = 10995 -> 19% = 2089,05 + 100 = 2189,05€ tax

That is sad man!!!! and wrong...