§ 9 ErbStG comprehensively regulates the origin of inheritance tax and gift tax. The § 9 (1) no. 2 ErbStG concerns the origin of the gift tax, i.e. the case of a gift among living people. Accordingly, the gift tax basically arises with the execution of the gift. In this article, we explain when the gift is carried out in this sense, how the regulation differs from the regulations regarding other types of tax and when the gift tax is due.

1. origin of the gift tax

1.1. Concept of the origin of gift tax

Claims arising from the tax liability relationship arise as soon as the facts to which the law attaches the obligation to perform are realized, § 38 AO. This applies to claims under the Inheritance and Gift Tax Act. The relevant facts are laid down in §§ 1 to 8 ErbStG. The realization of the facts creates the entitlement from the tax liability relationship. The tax administration can therefore claim the tax liability and make it due. It is not necessary that the taxable person has the will to realize the facts.

1.2. Relationship between the gift tax and the tax assessment

The tax notice issued later therefore has only declaratory significance for the creation of the gift tax. The tax liability has already arisen by law through realization of the facts and not just by issuing the tax notice. Therefore, the purpose of issuing the adjustment notice is to assert the entitlement that has arisen. As a result of the determination made in accordance with § 155 (1) sentence 1 AO, the taxpayer's obligation to provide services only arises.

However, the refund of the tax payment pursuant to § 37 (2) sentence 1 AO is only considered after the elimination of the tax assessment by annulment or successful action. The tax assessment is not a legal ground within the meaning of Section 37(2) AO. However, the refund claim can only be successfully asserted if the tax assessment can be cancelled under formal law. The formal validity of the tax ruling supersedes its material defectiveness.

1.3.Differences in income tax

The timing of economic enrichment is set differently in the different tax types. In the context of income tax, the book value link of § 6 paragraph 3 EStG applies in the case of freely transferred operational categories. Therefore, hidden reserves are not realized and no profit is taxed in this respect. If the corresponding asset does not belong to an operating assets of the donor, then the deductions for wear are measured according to the acquisition or production costs of the legal predecessor, § 11d (1) sentence 1 EStDV. In all cases, however, free acquisition triggers gift tax.

A mother wants to transfer assets to her children. That is why she gives the daughter a house by way of the anticipated succession and the son her own business.

Then the daughter enters the legal position of the mother with regard to the depreciation for wear for the house, § 11d (1) sentence 1 EStDV. She covers the acquisition and production costs that her mother had. The son, on the other hand, takes over the book values from the company, § 6 (3) EStG. However, acquisition costs and capital gains do not arise.

Gift tax is in both cases a free grant according to § 7 (1) no. 1 ErbStG. In principle, the tax arises with the execution of the grant according to § 9 (1) no. 2 ErbStG. It would be conceivable that a privileging according to § 13d ErbStG intervenes for the daughter and for the son according to § 13a ff. ErbStG.

§ 9 EStG as a regulation of the origin of the gift tax

2.1. Construction of the standard

§ 9 ErbStG comprehensively regulates the origin of inheritance tax and gift tax. There are all the cases that trigger inheritance tax or gift tax. For these is then individually regulated when the inheritance tax or gift tax arises.

The origin of the gift tax thus in the case of a gift among living persons is regulated by § 9 (1) no. 2 ErbStG. § 9 (1) no. 1 ErbStG concerns the acquisition of property upon death. The law differentiates here between different cases of acquisition and thus different times of origin. The date of origin for the special purpose grant is stipulated in § 9 (1) no. 3 ErbStG. The date for the successor replacement taxation is set by § 9 (1) no. 4 ErbStG.

2.2. origin of the gift tax after this basic statement

The gift tax should not arise until the taxpayer has acquired an asset position. In principle, not a mere entitlement, but only the actual acquisition should be taxed. In fact, the taxpayer has only acquired when he is economically enriched.

2.3 Determined date of origin of gift tax

According to § 9 (1) no. 2 ErbStG, the gift tax arises with the execution of the donation. The law does not contain further explicit legal provisions despite the highly differentiated facts for donation among living in § 7 ErbStG. In addition, the provisions on the generation of inheritance tax may rather be used in the acquisition of death pursuant to § 9 (1) no. 1 ErbStG. Nor is there any objective reason for taxing a gift other than if the same economic goods had passed in the way of inheritance.

3. origin of the gift tax with execution of the gift

3.1. Definition

The question therefore arises as to when the free grant is executed. A voluntary donation presupposes, first of all, in objective terms, that the service leads to an enrichment of the covered person at the expense of the donor and that the donation is objectively free of charge. The voluntary donation is therefore successfully carried out if the recipient can actually and legally freely dispose of what has been turned in relation to the contributor. Whether he can do this is judged solely by the civil law situation.

3.2. Person involved

The persons who have lost or received the economic good in the end are also judged by civil law. In principle, the donor is the one who provides the taxable benefit from his assets.

But someone can also receive a donation as a transit person or intermediary person, which he must pass on in full to a third party in accordance with the existing obligation. Then, under gift tax law, there is a donation from the property of the donor to the third party. Due to the obligation to pass on, a donation of the intermediary to the third party is not considered. It is therefore decisive whether the initially envisaged person has his own decision possibility with regard to this use.

3.3. Object of grant

The donor must give the gifted person what he is entitled to according to the gift agreement. The specific object of the donation is also governed by civil law. The subject of a generous donation may be the asset substance or a possibility of using it. However, it is irrelevant whether the usage possibility is reified.

The decisive factor for determining the object of the grant is first the will of the party. The will of the party depends on whether there is a two-sided gift contract or a one-sided gift. In the case of a unilateral donation, the object is the object which is to be given to the thoughtful person according to the will of the donor. Therefore, the will of the donor is fundamentally decisive. If there is a two-way gift contract, however, its conditions for determining the subject-matter of the service are to be used.

3.4. When is the necessary availability available?

In order for the gift to be carried out, the gifted person must have received power of disposal over the gifted object. The decisive factor is that the covered person in relation to the donor can finally actually and legally freely dispose. For the execution of the donation, therefore, the real execution – i.e. the transfer of ownership – is necessary. Therefore, there must be a real right acquisition for movable property according to §§ 929 ff., 854 BGB and for claims according to § 398 BGB. Due to the decisiveness of civil law, an earlier execution time cannot be brought about with arbitrary backdating of the donation.

It should be noted, however, that when granting a right of entitlement, the grant is already carried out with transfer of the right of entitlement. Therefore, the transfer of the subject-matter to which a right of entitlement exists is not necessary.

However, there are also grants which, due to their legal nature, do not require a real enforcement act. This includes, for example, the granting of a sub-participation in a share of the shareholder of a partnership. This is already carried out at the time of the contractual agreement of the sub-participation. Therefore, the gift tax already comes into existence at this time.

3.5. Conditional grants

For conditional grants among living persons, the provision of § 9 (1) no. 1 letter a ErbStG applies. The corresponding donation is therefore not to be taken into account for gift tax until the condition occurs.

A donation may also require approval. Then the question arises whether the gift also triggers the legal consequences of a suspensively conditioned acquisition of rights. This is relevant for the question of whether the gift is deemed to have been carried out ex nunc at the time of granting the authorisation ex nunc or whether the authorisation, as in civil law, has an effect ex tunc on the date of the original transaction in the past. Financial management differentiates. In the case of a property gift, which depends on a permit, civil law validity occurs only with the granting of the permit. This affects the day of conclusion of the contract. From a tax point of view, the granting of an official approval in the case of a gift of land has a retroactive effect. However, the approval under private law does not have any retroactive effect.

4th Date Principle

The origin of the inheritance tax and gift tax is aimed at a specific under-year date, the deadline. The tax resulting from the realisation of the facts is fundamentally irrevocable. Therefore, the valuation according to the conditions at the time of tax origination is also decisive.

But it is conceivable that a plurality of gifts took place among the living. Then the gift tax arose at several times. This must be taken into account by the tax administration when setting the gift tax. Therefore, it must actually set the several tax cases in separate tax notices. It can also set the tax cases in a document. However, it must then specify exactly which life and employment circumstances are the basis of the tax assessment. This is the only way to determine the limits of endurance. The lack of an indication of the taxed individual matters of life or the inadmissible undivided combination of several tax cases in one decision leads to the invalidity of the decision according to § 125 (1) AO.

However, it is also possible that several life issues are combined into one employment situation. These then have the same date because of the summary. This is why the gift tax comes into existence at the same time. Especially in the case of donations among living people, however, the question arises under which conditions several donations may be drawn together to form a total acquisition.

In the opinion of the tax administration, if several assets form a donation, the individual tax values must be combined into a single tax value of the total donation. The only prerequisite here is the will of the parties that the transfer of the grant items should necessarily form a single transaction under civil law.

5th due date of tax liability

The determination of the tax liability in the tax assessment does not say anything about when the tax authorities can specifically demand the service. This is rather a question of the maturity of the benefit. The due date of the gift tax results from the performance bid contained in the tax assessment in the sense of § 254 (1) sentence 1 AO and the associated payment period.