CURRENT AFFAIRS

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TAX LAW

Gift tax in the case of a joint account

It is rather common for spouses who have a joint account that the amounts paid into the account by each spouse are very different. The tax offices take advantage of these differences and start from the assumption that, if both of them have the power to draw on the account, the spouse who pays the higher amounts makes a gift in favour of the other spouse, since with a joint bank account, both account holders have equal rights to the account. The German Federal Fiscal Court has approved this practice (BFH (Federal Fiscal Court) ref. no.: II R 33/10). Accordingly, gift tax may accrue if one of the spouses pays considerably higher amounts to the account which exceed the tax allowance of EUR 500,000.00 within ten years, while both spouses dispose of the money, e. g. by regular withdrawals.

As at: 1. October 2012