Gifting money to my parents

Hello all,

I need to send a somewhat large amount of money (~20k euros) to my parents in Italy.

Technically they just need it as an interest free loan, but I wouldn’t mind for it to stay a gift.

I’m planning to convert chf to eur with IBKR (hopefully IBKR doesn’t complain) and then send them to their Italian bank account with Yuh, which is supposed to be free with SEPA transfers.

I am wondering whether there are some tax considerations I should be keeping in mind, or if it is just a tax free gift?

Thanks everyone in advance!

Taxation of gifts depends on the canton the gift-giver lives in as well as the relationship between them and the recipient.

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Check if you have gift tax.

I see, I live in canton Zurich, I’ll check it. Thanks!

The tax is usually paid by the recipient, so what matters is likely to be what the italian situation is.

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I just called the canton Zurich office.
They said that I need to declare the gift on the next tax return and that up to 200.000CHF per parent is tax-free.
So you can send up to 400k total to your parents tax free in canton Zurich

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same research should be done by your parents, since they are not located in switzerland

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Likely your parents need to declare it in the tax declaration in italy. Idk in Italy but in Spain any movement over certain amount of money in the bank account would be informed to tax autorities.
Tipically it would be part of their income tax - but not sure how it works for italy so better fo some research.

Maybe off topic and not sure it’s applicable or not, if your parents are dependent on you then you can also give them money as support and it’s tax deductible.

Different cantons have different limits on what’s deductible and what’s minimum needed to qualify.

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Looks like no tax on gift in Italy for foreign assets (make sure to not do the transfer from an Italian bank account).

Likely still has to be declared though (and do you own research :slight_smile: don’t trust random people on the internet).

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I don’t get it. If a gift tax is paid by receivers (so parents in Italy), why are any “tax-free limits” in Zurich even mentioned? That should be the case if the parents are located in Zurich, not abroad, right?

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The gift tax is paid by the receiver but it is determined based on the donor’s residence. In Switzerland federal government does not levy gift taxes and lets cantons to levy gift taxes only if the donor was their resident (or the donation is a real estate located in that canton) - and ZH canton does.

This is all specific to Switzerland though, in theory any other country involved might levy taxes on the gift too (residence of the donor / receiver, citizenship of the donor / receiver, country the assets are located in, etc.)

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As to why Switzerland decided that the tax must come out of the receiver’s money and not donor’s, I don’t know for sure but I think it makes sense to tax the person who has the money that you are taxing (i.e. the receiver in this case). Since the tax is basically a subset of money that Switzerland wants back and the taxes are declared after the gift is done - that money is now in the hands of the receiver. If you tax the donor you might end up in the situation where they donated so much that they do not have enough money left to pay the taxes - but it should rarely happen with the receiver since they received more money than the tax due.

On top of that gift and inheritance taxes are equivalent and works in the same way in Switzerland, and for inheritance you really can’t tax the donor as the guy is dead and the money is all now in the hands of heirs

Thanks for the reply. What you say definitely makes sense, but it also stressed me out seriously, because I have done a money gift to my father, living in another country, in 2023. But I’m a resident of Basel-Stadt, where gifts from children to parents are taxed (above 10’000 CHF). So that would mean my father should declare the gift in the canton and pay tax for it, but he hasn’t done anything like that.

So I made an instant call to Basel-Stadt tax administration and describe the situation, but fortunately - they said that would be the thing if he lives in Switzerland, but because he lives in another country - they don’t expect any declaration nor tax from him. Heart attack cancelled, but now I wonder if it’s Basel-Stadt-specific and other cantons could expect a tax in such situation, or a general rule of thumb.

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Maybe they’re just being pragmatic given the amount involved (10k is kinda small for them I assume).

I’d guess they would enforce it for an inheritance (because in that case they’d control things), or for meaningful amounts?

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I mean - the gift was much higher than 10’000 CHF, during the call I just mentioned it’s “above 10’000 CHF” as that’s the tax-free limit for such gifts in Basel-Stadt. But I ensured twice and the guy said it’s not related to the amount, but to the fact my parent lives abroad.

I don’t want to contradict the tax office obviously but it seems strange to me that the tax is not levied just because the receiver is abroad. I looked briefly into the BS gift tax rules and I did not find anything about the residence of the receiver that would change it - it clearly says that the tax liability exists when the donor is resident in BS.

Could it be that in this case you fall into one of the exception points, e.g. “Contributions to essential living expenses” or “gifts up to 10.000 chf”?

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The best would be to have this statement in writing :smile:

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Nope, these exceptions are not relevant to my case and for sure I haven’t suggested them during the call. And tbh - I was also surprised, because the more I read about it, the more I was convinced I was screwed (quotes like: “The tax is always due in the canton in which the donor is resident or in which the deceased was last resident. Where the donee or heirs live is irrelevant for the tax liability”), so that was a huge relief (but I still have some doubts :upside_down_face:).

I have just contacted Deloitte through my company as well, if they confirm it - I would be more calm, if they say the opposite - I would ask the canton one more time via email to have a proof.