Those who transfer money, fixed deposit accounts, cash or checking accounts at an early stage subject to usufruct save more than 70% inheritance tax and gift tax. This is because the usufruct can be deducted at the gift tax. We show you how to save taxes!
For gifted assets, the gifted person usually receives all property rights. Different with usufruct: Here the bestower still has the administrative rights and the right to fruit cultivation in the property. This means that even after the donation, the donor can still determine how the assets are invested. In addition, the giver is still entitled to the income (= interest).
2. How much gift tax and inheritance tax is saved?
For example, if a property of EUR 1,000,000.00 is transferred from the mother (60 years old) to her son, the saved gift tax is calculated as follows:
2.1. Variant 1: Gift without usufruct
Value of assets: 1,000,000
Child allowance: – 400,000
Subject to gift tax: 600,000
x Tax rate: 15 %
Gift Tax: 90,000
2.2. Variant 2: Gift with usufruct
First, a fictitious annual return is to be determined. For money, this is by § 15 Abs. 1 Evaluation law specified by law with 5.5 percent. At EUR 1 million, there is a theoretical interest income of EUR 55,000 p.a. We know that this value is utopian high in times of low interest rates. But this is the historical requirement of the legislator. Our usufruct scheme exploits precisely this historical legal gap.
From the sex (female) and the age (60 years), the statistical life expectancy (21,52 years) and the multiplier (12,779) can be derived.
The net present value of the usufruct is determined by the multiplication of the multiplier (12,779) and the notional interest income (EUR 55,000) and thus results in EUR 702,845. Thus, the net present value of the usufruct is more than 70% of the gifted assets!
NPV of usufruit: – 702,845
Child allowance: – 400,000
Subject to gift tax: 0
x Tax rate: 15 %
Gift Tax: 0
The allowance is not used in full and is available in the amount of EUR 102,845 for further transfers.
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.