ou may be thinking…

“A gift is a gift, it shouldn’t matter who receives it.”
But it does matter. The recipient determines whether you’ll face taxes, need a more detailed contract, or risk a future dispute.

Clients often ask me

• Is there a tax difference between donating to children or to a friend?

• Does the contract have to be different if I give to a relative?

• Are there more risks when donating to non-relatives?

• When is a notary necessary and when is a lawyer enough?

Donations between relatives – benefits and pitfalls

• Tax exemption: donations in the direct line (parents ↔ children, grandparents ↔ grandchildren) and between spouses are tax-free.

• Trust: usually fewer disputes, but conflicts can still arise (e.g., after divorce or between siblings).

• Form of contract: always recommended in writing; for real estate, a written contract and Land Registry registration are mandatory.

• Common mistakes: forgetting to include a right of use clause → the donor loses the right to live in the property.

Donations between non-relatives – what to watch out for

• Tax burden: for the recipient, the donation counts as income subject to income tax (15% or 23% depending on the amount).

• Proof issues: without a written contract, the recipient may have trouble proving the origin of funds or property.

• Higher risk of disputes: the donor may later try to revoke the gift.

• Form of contract: the contract should be as detailed as possible (purpose, revocation clause, burdens).

The biggest risks

• Assuming “gift tax no longer exists” → for non-relatives, income tax applies.

• Transferring real estate to a friend without a lawyer → Land Registry may reject the entry due to errors.

• Forgetting a revocation clause → without it, you have limited protection if circumstances change.

Step-by-step process

Donations between relatives:

1. Verify if the relationship qualifies for exemption (parents, children, spouses).

2. Draft a written contract (mandatory for real estate).

3. Consider including a right of use clause for the donor.

4. For real estate, file a registration proposal with the Land Registry.

Donations between non-relatives:

1. Draft a detailed donation agreement.

2. Check tax implications and prepare a tax return.

3. For real estate – verified signatures + registration proposal.

4. Consider including a revocation clause (e.g., for ingratitude).

Real-life examples

• A mother donated an apartment to her daughter but forgot to include a right of use. The daughter sold the flat and the mother ended up renting elsewhere.

• A client received a cash gift from a friend. The tax office reassessed it as taxable income.

Lawyer’s recommendation (checklist)

☑ for family donations, consider a right of use clause
☑ for non-relative donations, expect income tax
☑ never rely on a generic template, draft the contract individually
☑ always include the possibility of revoking the gift
☑ for real estate, always include a Land Registry filing proposal

FAQ

Do I have to pay tax on a gift from my parents?
No, gifts from direct relatives are tax-free.

If I give money to a friend, does he have to pay tax?
Yes, unless he qualifies as a relative in the exempt categories.

Can I draft the contract myself?
Yes, but the risk of mistakes is high. For real estate, I strongly recommend using a lawyer or notary.