Gifts from a Child to Their Parents: Allowance, Debt Repayment, Notification

Which tax class and which allowance apply to your parents?

Under § 15 ErbStG, the tax class depends on the personal relationship of the recipient to the donor. Parents belong to tax class I only "in the case of acquisitions upon death" (tax class I no. 4). In the case of a gift, they fall under tax class II no. 1: "parents and ancestors, insofar as they do not belong to tax class I".

Gift to your parents versus acquisition by your parents upon death

The allowances are set out in § 16 ErbStG. Under its paragraph 1, they apply in full "in cases of unlimited tax liability", which is assumed here. In the case of limited tax liability, the allowance is reduced by a partial amount under paragraph 2. The rate ranges come from § 19 ErbStG. Which rate within the range applies depends on the value of the taxable acquisition. The allowances for all other groups of persons can be found in the general overview of gift tax allowances.

Father and mother are each separate recipients, and the allowance applies separately to each of them. Under § 14 ErbStG, the benefits each parent receives within ten years "from the same person" are aggregated. For Jonas, this means: his transfers to his father and to his mother are considered separately, whereas several transfers to the same parent within ten years are aggregated.

Key takeaway: During your lifetime, with unlimited tax liability, each parent has an allowance of EUR 20,000 for transfers from you within ten years, not EUR 100,000.

How does the law classify money, debt repayment and monthly payments?

Under § 7 ErbStG (1) no. 1, a gift is "any gratuitous transfer inter vivos, insofar as the recipient is enriched by it at the expense of the transferor". Under § 10 ErbStG (1), the enrichment is taxable "insofar as it is not tax-exempt". In this context, the provision refers among other things to the exemptions under § 13 and the allowances under § 16. Paying off a loan is therefore not the opposite of a gift but one form of transfer.

Forms of transfer and how they are classified

For Jonas, this means: whether he transfers the payoff amount to his parents or pays it directly to their bank does not, under the wording read, change the fact that his parents are enriched. The exemption in § 13 ErbStG (1) no. 4a for the release from obligations relating to the family home applies by its wording only to spouses and civil partners, not to children and parents.

Key takeaway: Treat a gratuitous payoff of your parents' loan as a gift that counts against the allowance of EUR 20,000 per parent. The provisions evaluated contain no separate exemption for the purpose of repaying a debt; whether the payoff can be exempt as maintenance remains open.

Florian Enders on gifts from a child to their parents

When can support for your parents remain tax-free?

The most important exemption in this direction is § 13 (1) no. 12 ErbStG. Under it, "transfers inter vivos for the purpose of the appropriate maintenance or the education of the recipient" remain tax-free. What is appropriate is governed by paragraph 2: a transfer "that corresponds to the financial circumstances and the station in life of the recipient". The recipients here are the parents. The yardstick is therefore their situation, not the child's income. Under paragraph 2 sentence 2, a transfer that exceeds this measure is "taxable in full". The exemption under no. 12 is then lost for the entire transfer, not just for the excess portion. The allowances under § 16 are listed separately in § 10 (1).

By its wording, no. 12 does not require a statutory maintenance obligation of the child. The law does not state an amount, and without evaluated case law this article does not quantify appropriateness. No. 12 refers to the purpose of maintenance. Whether the one-off payoff of a home loan serves this purpose is not answered by the wording for Jonas.

Further numbers of § 13 (1) at a glance:

• No. 6 exempts an acquisition "accruing to the parents, adoptive parents, step-parents or grandparents of the deceased", provided that the acquisition together with the recipient's other assets does not exceed EUR 41,000 and the recipient "is to be regarded as unable to work as a result of physical or mental infirmity and taking into account his or her previous station in life" or is prevented from pursuing gainful employment by running a joint household with descendants who are unable to work or in education. If the value of the acquisition together with the recipient's other assets exceeds EUR 41,000, the tax is, under sentence 2, levied only insofar as it can be covered from half of the amount exceeding the value limit. The provision refers to the deceased. Whether it also applies to gifts from the child via § 1 ErbStG (2) remains an open question for review.
• No. 10 covers assets that parents had transferred to their descendants and that "revert upon death". For transfers you make to your parents during your lifetime, this number does not fit even by its wording.
• No. 14 exempts "customary occasional gifts". The law does not state a value limit.

Under § 13 (3), each exemption provision is to be applied on its own.

Key takeaway: For ongoing support, no. 12 offers a possible exemption. It applies only up to the limit of appropriateness, measured by your parents' circumstances. For a transfer above that, the exemption under no. 12 is lost entirely.

Maintenance obligation, income tax deduction and social assistance

Under German civil law, relatives in the direct line are obliged under § 1601 BGB to provide maintenance to one another. This has two prerequisites:

• Need of the parents: Under § 1602 BGB (1), only a person who "is unable to support himself or herself" is entitled to maintenance.
• Ability of the child to pay: Under § 1603 BGB (1), a person is not obliged to pay maintenance if, taking into account his or her other obligations, he or she is unable to provide maintenance without endangering his or her own appropriate maintenance.

Whether Jonas's parents are in need in this sense depends on their actual circumstances. This article makes no statement on that.

For income tax purposes, § 33a EStG (1) allows, on application, a deduction of expenses for the maintenance of a person who is legally entitled to maintenance from the taxpayer or the taxpayer's spouse. For your parents, this prerequisite depends on the rules of §§ 1602 and 1603 BGB just mentioned, that is, on your parents' need and your ability to pay. Under sentence 3, the only person treated as equivalent is one for whom domestic public funds intended for maintenance are reduced in view of your maintenance payments.

The expenses are deductible up to the amount of the basic tax-free amount (Grundfreibetrag). For the 2026 assessment period, the basic tax-free amount under § 32a EStG (1) sentence 2 no. 1 is EUR 12,348. Under § 33a (1) sentence 2 EStG, this maximum is increased by certain contributions under § 10 (1) no. 3 EStG for the protection of the person entitled to maintenance. Further conditions from paragraph 1:

• Neither you nor any other person is entitled to an allowance under § 32 (6) EStG or to child benefit for the supported person.
• The supported person has no assets or only minor assets. An appropriate residential property within the meaning of § 90 SGB XII (2) no. 8 is disregarded. Under that provision, appropriateness depends, among other things, on the number of occupants, the housing needs, the size of the plot and of the house, the layout and fittings, and the value.
• If the supported person has income or receipts of his or her own, the maximum amount is reduced by the portion by which they exceed EUR 624 per calendar year. It is also reduced by certain public education grants. The actual expenses are deductible at most up to this reduced maximum amount.
• If several taxpayers bear the expenses, for example siblings together, each of them may deduct under sentence 7 the portion that corresponds to his or her share of the total payments.
• If the supported person is subject to unlimited or limited tax liability, you must state his or her tax identification number in your tax return.
• Cash payments must be made by transfer to the supported person's account.

The wording read does not answer whether the repayment of a home loan counts as maintenance expenses or whether a payment directly to the bank satisfies the transfer requirement.

If parents receive social assistance, their maintenance claim against a child can, under § 94 SGB XII, pass to the social assistance authority up to the amount of the expenditure incurred. However, under paragraph 1a, maintenance claims against children are disregarded unless their annual total income within the meaning of § 16 SGB IV exceeds EUR 100,000 in each case. It is presumed that this limit is not exceeded; the presumption can be rebutted. In addition, the claim does not pass insofar as the maintenance claim is fulfilled by ongoing payment.

Key takeaway: Maintenance law, the income tax deduction and the gift tax exemption each have their own prerequisites. A payment can be favoured under one of these laws and not under another.

Ten years, tax debtor and notification

Aggregation: Under § 14 (1) ErbStG, several benefits accruing from the same person within ten years are aggregated; the earlier acquisitions are added to the last acquisition at their earlier value. In the family case, the payoff and further transfers from Jonas to the same parent within ten years are therefore aggregated. The wording read does not expressly answer how parts exempt under § 13, such as payments for appropriate maintenance, enter into this aggregation.

When the tax arises: For gifts inter vivos, the tax arises under § 9 ErbStG (1) no. 2 "at the time the transfer is made".

Tax debtor: Under § 20 ErbStG (1), the tax debtor is the recipient, "in the case of a gift also the donor". Alongside his parents, Jonas therefore also owes the tax.

Assumption of the tax: If the donor assumes the recipient's tax, the acquisition under § 10 (2) ErbStG is the amount resulting from the acquisition together with the tax calculated on it.

Notification under § 30 ErbStG:

• Your parents as recipients must notify the tax office responsible for inheritance tax of the acquisition in writing within three months "of becoming aware of the accrual" (para. 1).
• If the taxable acquisition takes place by way of a transaction inter vivos, the person from whose assets the acquisition originates is also obliged to notify it, in this case you (para. 2). What exactly "taxable acquisition" covers here, for example for transfers within the allowance or for exempt maintenance, remains an open question for review.
• No notification is required if the gift has been recorded by a court or a notary (para. 3 sentence 2).

The notification should include, among other things, the subject matter and value of the acquisition, the personal relationship to the donor and earlier transfers by type, value and date (para. 4). General information on the notification duty can be found in the article Gift not reported.

Key takeaway: As the donor, you yourself are also a debtor of the tax. If you assume your parents' tax, you thereby increase the acquisition on which the tax is calculated.

Form, reclaiming the gift and a flat for your parents

Form: Under § 516 BGB (1), a gift is a transfer by which a person enriches another from his or her assets, if both parties agree that the transfer is made without consideration. Under § 518 BGB (1), a contract by which a performance is promised as a gift requires notarial recording of the promise. Under paragraph 2, the defect of form is cured by performance of the promised act. If Jonas makes a binding promise to his parents of future monthly payments as a gift, this is therefore a question of form. Whether payments made to fulfil an existing maintenance obligation are without consideration within the meaning of § 516 at all remains open.

Reclaiming in case of your own hardship: Insofar as, after the gift has been executed, the donor is unable to meet his or her own appropriate maintenance and to fulfil his or her statutory maintenance obligations, the donor can, under § 528 BGB (1), demand return of the gift under the law of unjust enrichment. The claim therefore extends only as far as this hardship. The parents can avert the return by paying the amount required for maintenance. Under § 529 BGB, the claim is excluded

• if the donor brought about his or her need intentionally or through gross negligence,
• if, at the time the need arose, ten years had passed since the performance, or
• insofar as the parents, taking into account their other obligations, cannot return the gift without endangering their maintenance appropriate to their station or the fulfilment of their statutory maintenance obligations.

A flat instead of money: If you give your parents a flat, gifts of real property inter vivos within the meaning of the Inheritance and Gift Tax Act are exempt from real estate transfer tax under § 3 GrEStG no. 2. However, gifts subject to a burden (Auflage) are taxable with regard to the value of such burdens as are deductible for gift tax purposes. No. 6 additionally exempts acquisitions by persons related to the transferor in the direct line. For gift tax, what was said above applies to a flat; this article does not cover its valuation.

Key takeaway: A promise of future payments made as a gift requires notarial recording, although performance of the act cures a defect of form. Reclaiming a gift because of your own impoverishment is only possible within the limits of §§ 528 and 529 BGB.

Steps before the transfer

1. Define the purpose: Record separately for each parent whether it is a present, the repayment of a loan or ongoing maintenance.
2. List earlier transfers: List all your transfers to the same parent from the last ten years, because they are aggregated.
3. Choose the payment route: Decide whether you pay your parents or their bank. An income tax deduction under § 33a EStG requires that your parents are legally entitled to maintenance from you, that is, in need within the meaning of § 1602 BGB, and that you are able to pay under § 1603 BGB, or that your parents are treated as equivalent because domestic public funds intended for their maintenance are reduced in view of your maintenance payments. For cash payments, the law then requires a transfer to the supported person's account.
4. Record your parents' circumstances: For an exemption under § 13 (1) no. 12 ErbStG, your parents' financial circumstances and station in life are decisive.
5. Clarify who bears the tax: Agree who bears any tax. If you assume it, the acquisition increases.
6. Choose the form: A promise of future payments made as a gift requires notarial recording; a defect of form is cured by performance of the promised act. If the gift has been recorded by a court or a notary, no notification is required.
7. Plan the notification: Without such recording, your parents notify the acquisition within three months of becoming aware of it. If the taxable acquisition takes place by way of a transaction inter vivos, you are also obliged to notify it (§ 30 (2) ErbStG).
8. Consider your own situation: Take your own maintenance and your maintenance obligations into account, because reclaiming a gift due to your own impoverishment is only possible under the conditions of §§ 528, 529 BGB.

Frequently asked questions

How much can I give my parents tax-free?

With unlimited tax liability, which is assumed here, each parent has an allowance of EUR 20,000 for transfers from you (tax class II); transfers to the same parent within ten years are aggregated. In addition, transfers for appropriate maintenance can be tax-free under § 13 (1) no. 12 ErbStG; under § 13 (2), a transfer above this measure is taxable in full.

Is paying off my parents' home loan exempt from gift tax?

The provisions evaluated contain no separate exemption for the purpose of repaying a debt. If the payoff is gratuitous, it enriches your parents at your expense, whether you pay them or the bank; the allowance of EUR 20,000 per parent also applies to it. It remains open whether a payoff can be tax-free as maintenance under no. 12 and what applies if you yourself are a co-debtor or guarantor.

As a child, do I have to report a gift to my parents?

Your parents must notify the acquisition in writing within three months of becoming aware of it. If the taxable acquisition takes place by way of a transaction inter vivos, you are also obliged to notify it under § 30 (2) ErbStG. If the gift has been recorded by a court or a notary, no notification is required.

Who pays the gift tax, my parents or me?

The tax debtors are your parents as recipients and, in the case of a gift, also you as the donor. If you assume the tax, it is added to the acquisition.

Can I demand the money back if I get into hardship myself?

Under § 528 BGB, you can demand return insofar as, after the gift, you are unable to meet your own appropriate maintenance and to fulfil your statutory maintenance obligations. Your parents can avert the return by paying the amount required for maintenance. The claim is excluded if you brought about your need intentionally or through gross negligence, if ten years had passed since the performance when your need arose, or insofar as the return would endanger your parents' maintenance appropriate to their station or the fulfilment of their statutory maintenance obligations.

Assumptions, open questions and limits of this article

Assumptions: The family case is fictitious. A purely domestic German case with unlimited tax liability under § 2 ErbStG and a gratuitous transfer by the child is assumed.

Open questions that the wording read does not answer:

1. How a debt repayment is to be valued and how it is allocated between father and mother in the case of a joint loan.
2. Whether gratuitousness is lacking if the child is itself a co-debtor or guarantor of the loan.
3. Whether paying off a home loan can be maintenance within the meaning of § 13 (1) no. 12 ErbStG and where appropriateness ends in the individual case.
4. Whether § 13 (1) no. 6 ErbStG also applies to gifts from the child via § 1 (2) ErbStG.
5. How far the child's notification duty under § 30 (2) ErbStG extends and which deadline applies to it; the three-month deadline is set out in para. 1 for the recipient.
6. Whether payments made to fulfil an existing statutory maintenance obligation are gratuitous transfers within the meaning of § 7 (1) no. 1 ErbStG.
7. Whether payments made to fulfil an existing maintenance obligation are without consideration within the meaning of § 516 BGB.
8. Whether a loan repayment counts as maintenance expenses under § 33a EStG and whether a payment directly to the bank suffices for this.
9. Whether a loan to the parents instead of a gift could be considered and how an interest benefit would be treated. This article does not give any figures on this.
10. How transfers exempt under § 13 ErbStG enter into the aggregation under § 14 ErbStG.

Not covered: Cross-border cases and Switzerland, rights of residence and usufruct, rent-free provision of a flat, compulsory share consequences, reversion of the transferred assets on the death of the parents, parental maintenance in detail and the consequences of failing to notify.

Sources: The basis is the German statutory texts on gesetze-im-internet.de, each linked once, retrieved on 2 November 2026. Quotations from these statutes in this article are unofficial English renderings; only the German wording is authoritative. The amount of the basic tax-free amount applies to the 2026 assessment period. No case law was evaluated for this article.

Note: This article is for general information only and does not replace individual tax or legal advice. Whether and in what amount gift tax arises in your case depends on circumstances that are not known here.

Further reading

• Gift tax allowance: general overview
• Gifts to children for the opposite direction from parents to children
• Gift not reported on the notification duty in general
• Wealth planning for professional athletes
• Topic page: Gifts

If you would like to discuss your specific situation, you can arrange an initial consultation.