The claimant and his mother (both German nationals) each transferred their sole domicile from Germany to Switzerland on 30.11.2011. In a contract from 16.12.2011, the claimant was gifted a property in Switzerland by his mother over which she was granted a lifetime usufruct. In November 2017, the claimant notified the German tax office of this and a gift tax assessment was subsequently issued by the office – the claimant refused to accept this.
The Munich tax court, in its judgement of 3.7.2019 (case reference: 4 K 1286/18, the appeal before the Federal Fiscal Court (BFH) under case reference II R 5/20 is pending), did not rule in favour of the claimant. Any generous donation between living persons, insofar as this enriches the beneficiary at the expense of the benefactor, would constitute a gift between living persons and thus be subject to gift tax. The gift agreement concluded between the claimant and his mother met the requirements for a gift. As the execution in the land register of the transfer of ownership set out in the agreement was immediately applied for and also subsequently completed, under the law, the gift tax liability arose on 16.12.2011. Furthermore, according to the tax court, there was a so-called extended unlimited gift tax liability. For this, when the tax liability arose, both the benefactor as well as the acquirer would have to have been regarded as German nationals and to have transferred their domicile abroad. This had indeed been the case – both had German nationality and each had transferred their domicile to Switzerland.
Result: A property transfer within a five-year period after transferring your domicile from Germany to a foreign country would thus be liable to gift tax. The Munich tax court judges viewed this provision as being neither unconstitutional nor an infringement of EU law.