Gift to a daughter-in-law: German tax class II and a 20,000 EUR allowance

Which tax class and which allowance apply to your child-in-law?

Under § 15 ErbStG para. 1, the tax class depends on the personal relationship of the recipient to the donor. Tax class I includes, among others, “the children and stepchildren” (no. 2). Tax class II includes “the children-in-law” (no. 5). Lena is therefore a child-in-law in relation to Klaus and in relation to Petra.

The allowances are set out in § 16 ErbStG para. 1, specifically “in cases of unlimited tax liability”:

• Children within the meaning of tax class I no. 2: 400,000 EUR (no. 2)
• Persons in tax class II, including children-in-law: 20,000 EUR (no. 5)
• Spouse and civil partner: 500,000 EUR (no. 1)

Under limited tax liability, para. 2 reduces the allowance by a partial amount.

Under § 14 ErbStG para. 1, several financial benefits received within ten years “from the same person” are aggregated. Gifts from Klaus and from Petra are therefore considered separately. By contrast, several gifts from the same parent to Lena within ten years are added together.

Takeaway: Under unlimited tax liability, your child-in-law has an allowance of 20,000 EUR in relation to each of you within ten years, your child 400,000 EUR.

Child or child-in-law: what does the same amount cost?

The tax rates are set out in § 19 ErbStG para. 1. They depend on the value of the taxable acquisition, i.e. the amount after deducting the allowance. Up to 75,000 EUR the rates are 7% in tax class I and 15% in tax class II, up to 300,000 EUR 11% and 20%, up to 600,000 EUR 15% and 25%.

Worked example for the family case. Assumptions: 300,000 EUR in cash, of which 150,000 EUR each is attributed to Klaus and to Petra (on attribution for the joint account, see the next section), no earlier gifts, unlimited tax liability, no tax exemption, the recipients bear the tax themselves.

Hardship relief under § 19 para. 3 ErbStG changes nothing in the family case. It limits the difference from the tax at the next lower value threshold. At a tax rate of up to 30%, this difference is only levied to the extent that it can be covered from half of the amount exceeding the value threshold. At 130,000 EUR, the difference is 26,000 minus 11,250 = 14,750 EUR. Half of the excess amount is (130,000 minus 75,000) / 2 = 27,500 EUR. The difference is therefore covered.

A smaller amount shows where hardship relief takes effect: if one parent gives Lena 100,000 EUR, 80,000 EUR is taxable. 20% would amount to 16,000 EUR. At 75,000 EUR it would be 15%, i.e. 11,250 EUR. The difference of 4,750 EUR is only levied up to half of the excess 5,000 EUR, i.e. up to 2,500 EUR. The tax is therefore 13,750 EUR.

Child and child-in-law compared

Rounding the taxable acquisition down to the nearest full 100 EUR under § 10 para. 1 ErbStG does not change the figures.

Takeaway: With 300,000 EUR, the difference in the example lies between 0 EUR and 52,000 EUR in gift tax, depending solely on who is established as the recipient.

To whom is the money attributed if the parents pay jointly?

Under § 7 ErbStG para. 1 no. 1, a gift between living persons is “any gratuitous transfer between living persons, insofar as the recipient is enriched by it at the expense of the transferor”. Three questions follow from this for the family case.

Parents' joint account. Whether 300,000 EUR from a joint account is paid at the expense of Klaus, of Petra or of both, and in what proportion, is not answered by the wording. The half-and-half split in the worked example is an assumption.

Joint gift to Max and Lena. The provision refers to the extent (“soweit”) to which the respective recipient is enriched. Each recipient is therefore an acquirer with their own share. How the shares are to be measured if the parents transfer the money to a joint account of the couple and nothing has been specified remains open.

Passing on from the child to their spouse. If Max receives the money and later gives Lena part of it, the allowance of 500,000 EUR applies between the spouses. Under § 42 AO, tax law cannot be circumvented by abuse of legal structuring options. Under para. 2, an abuse exists if an inappropriate legal structure leads to a tax advantage not provided for by law, unless the taxpayer proves non-tax reasons for the chosen structure that are significant in view of the overall circumstances.

The Federal Fiscal Court has decided a case in which a parent gave their child a property and the child immediately afterwards gave a co-ownership share to their spouse, without being obliged to the parent to do so. According to the decision, there was no gift from the parent to the child-in-law for gift tax purposes (BFH, judgment of 18 July 2013, II R 37/11). The case concerned a property and the absence of an obligation to pass it on. Whether this can be transferred to a cash amount for a house purchase and how an examination under § 42 AO turns out in your case remains open. This article does not give a rule of thumb on timing.

Takeaway: Before the payment, record in writing which of you two gives how much and which member of the couple receives how much. Passing the money on later from the child to their spouse is not a secure route.

Florian Enders on gifts to a daughter-in-law or son-in-law

Does the gift count towards initial assets under matrimonial property law?

Without a marriage contract, Max and Lena live under § 1363 BGB para. 1 in the property regime of the community of accrued gains. The assets of each spouse do not become joint assets. The accrued gain is equalised when the community of accrued gains ends (para. 2). Under § 1373 BGB, the accrued gain is the amount by which a spouse's final assets exceed their initial assets.

Under § 1374 BGB para. 2, assets that a spouse acquires after the property regime begins “by gift or as a marriage portion (Ausstattung)” are added to the initial assets after deduction of liabilities, “unless, in the circumstances, they are to be counted as income”. For Max and Lena this means:

• (a) Max: A gift from his parents is an acquisition by gift within the meaning of the wording.
• (b) Lena: The wording applies insofar as the gift from the parents-in-law is a gift. The Federal Court of Justice classifies gifts that parents make to the child-in-law for the sake of their child's marriage as gifts and assigns them to § 1374 para. 2 BGB. According to the BGH, however, the gift is included in the child-in-law's initial assets only in an amount reduced by any reclaim claim of the parents-in-law (BGH, judgment of 3 February 2010, XII ZR 189/06).

For both, the exception applies for acquisitions that, in the circumstances, are to be counted as income. Whether and in what amount a reclaim claim exists remains open (see the next section). How a transfer from Max to Lena would be classified under matrimonial property law is not covered by this article. Nor does it contain a calculation of the accrued gain or a statement as to which route is more favourable under matrimonial property law.

Takeaway: In the community of accrued gains, a gift from the parents is added to the initial assets of both the child and the child-in-law, unless it counts as income. For the child-in-law, according to the BGH, this happens only in an amount reduced by any reclaim claim.

What changes if the child divorces?

Relationship by marriage. Under § 1590 BGB para. 1, the relatives of one spouse are related by marriage (verschwägert) to the other spouse. Under para. 2, the relationship by marriage continues even if the marriage that created it has been dissolved.

Tax class. § 15 ErbStG names “the children-in-law” and does not refer to § 1590 BGB. Whether Lena still falls into tax class II no. 5 for later gifts after a divorce from Max is not expressly answered by the wording. Tax class II no. 7 does cover “the divorced spouse”. However, this refers to the donor's own former spouse, not to the former child-in-law.

Statutory reclaim. The statutory grounds for reclaiming a gift under the law of gifts are not linked to a divorce:

• Under § 528 BGB, the donor can demand return of the gift under the rules on unjust enrichment insofar as, after the gift has been executed, they are unable to maintain themselves appropriately and to fulfil their statutory maintenance obligations. The recipient can avert the return by paying the amount required for maintenance.
• Under § 529 BGB, this claim is excluded if the donor brought about their need intentionally or through gross negligence, if ten years have passed since the performance at the time the need arises, or insofar as the recipient cannot return the gift without endangering their maintenance appropriate to their station in life or the fulfilment of their statutory maintenance obligations.
• Under § 530 BGB, a gift can be revoked if the recipient, through a serious offence against the donor or a close relative of the donor, is guilty of gross ingratitude.

Interference with the basis of the transaction. § 313 BGB para. 1 permits an adjustment of the contract if circumstances that became the basis of the contract have changed significantly after conclusion of the contract, the parties would not have concluded the contract or would have concluded it with different contents had they foreseen this change, and one party cannot reasonably be expected to uphold the unaltered contract, taking into account all the circumstances of the specific case. If an adjustment is not possible or not reasonable for one party, the disadvantaged party can withdraw under para. 3. The BGH also applies the principles of the frustration of the basis of the transaction (Wegfall der Geschäftsgrundlage) to gifts from parents-in-law made for the sake of the child's marriage, and rejects a schematic approach in doing so (XII ZR 189/06). Whether and to what extent Klaus and Petra could reclaim anything after a divorce is not answered by this article.

Contractual reclaim rights are a drafting question. This article does not contain a model clause.

Takeaway: A divorce is not a ground for reclaim under §§ 528 to 530 BGB. Whether you reserve a contractual right to reclaim in the event of divorce is a drafting question to settle before the payment.

Tax debtor, notification and form

Tax debtor: Under § 20 ErbStG para. 1, the tax debtor is the recipient, “in the case of a gift also the donor”. Alongside Lena, Klaus and Petra therefore also owe the tax on their respective gift.

Assumption of the tax: If the donor bears the tax themselves, under § 10 ErbStG para. 2 the acquisition is deemed to be the amount resulting from adding the acquisition and the tax calculated on it. In the example routes in which tax arises, the figures then increase.

When the tax arises: Under § 9 ErbStG para. 1 no. 2, the tax arises “at the time the gift is made” (mit dem Zeitpunkt der Ausführung der Zuwendung).

Notification under § 30 ErbStG:

• The recipient must notify the acquisition in writing to the tax office responsible for inheritance tax within three months of becoming aware of the accrual (para. 1).
• If the taxable acquisition takes place through a legal transaction between living persons, the person from whose assets the acquisition derives is also obliged to notify (para. 2).
• No notification is required if the gift has been recorded by a court or a notary (para. 3 sentence 2).

Under § 13 ErbStG para. 1 no. 14, “the customary occasional gifts” remain tax-free. This article makes no statement on notification of such gifts. You can find more on the notification obligation in general in the article Gift not reported.

Form: Under § 516 BGB para. 1, a gift is a transfer by which one person enriches another from their own assets, if both parties agree that the transfer is made gratuitously. Under § 518 BGB para. 1, a contract by which a performance is promised as a gift requires notarial recording of the promise. Under para. 2, the defect of form is cured by effecting the promised performance.

Takeaway: As parents, you yourselves are jointly liable for the tax and, where applicable, subject to the notification obligation. A mere promise of a future payment requires a notary.

A house instead of money: real estate transfer tax and compulsory portion

Property transferred by the parents-in-law themselves. Under § 3 GrEStG no. 2, gifts of real property between living persons within the meaning of the Inheritance and Gift Tax Act are excluded from real estate transfer tax. However, gifts subject to a condition (Auflage) are subject to it with regard to the value of those conditions that are deductible for gift tax purposes. No. 6 excludes the acquisition by persons who are related to the transferor (Veräußerer) in the direct line. Under no. 6 sentence 3, “their spouses or their civil partners” are treated equally with these persons. In this respect, the child-in-law is treated in the same way as your own child.

Money for a purchase from a third party. In the family case, Max and Lena buy the house from an unrelated seller. § 3 no. 6 GrEStG is based on the relationship with the transferor, and Max and Lena are not related to the unrelated seller. The equal treatment therefore does not support an exclusion for this purchase. This article does not examine other exemption provisions. Whether a cash gift earmarked for a specific purchase would be treated differently for gift tax purposes remains open. The valuation of real property is not the subject of this article. You can find more on transferring your own property during your lifetime in the article Transferring a house.

Supplementary compulsory portion. If the deceased made a gift to a third party, a person entitled to a compulsory portion can, under § 2325 BGB para. 1, demand a supplement to the compulsory portion. Under para. 3, the gift is taken into account in full within the first year before the succession and by one tenth less within each further year before the succession. If ten years have passed since the performance, it is disregarded. The later start of the period under para. 3 sentence 3 applies only to gifts to the deceased's spouse, not to gifts to the child-in-law.

Takeaway: If the mother-in-law or father-in-law transfers a property themselves, the child-in-law is treated equally with the child for real estate transfer tax. For a purchase from an unrelated seller using gifted money, this equal treatment does not support an exclusion.

Steps before the gift

1. Determine the recipient: Decide whether the money goes to your child, to your child-in-law or to both in fixed shares, and record this in writing.
2. Determine the donor: Specify which amount comes from the father and which from the mother, especially with a joint account.
3. List prior gifts: Record, per donor and per recipient, all gifts of the last ten years, because they are aggregated.
4. Calculate the tax for each pairing: Allowance, tax rate and hardship relief apply per donor and recipient. Clarify who bears the tax; if you assume any tax that arises, the acquisition increases.
5. Plan for form and notification: A promise of a gift requires notarial recording. If the gift is not recorded by a court or a notary, the acquisition must be notified in writing within three months of becoming aware of it.
6. Know the couple's property regime: Ask whether a marriage contract exists, because this determines whether the rules of the community of accrued gains apply.
7. Consider reclaim in the event of divorce: Whether and how you reserve a contractual right to reclaim is a drafting question to settle before the payment.
8. Consider other children: Gifts can later lead to supplementary compulsory portion claims.

Frequently asked questions

How much can we give our daughter-in-law tax-free?

Under unlimited tax liability, she has an allowance of 20,000 EUR in relation to each parent (tax class II). Gifts from the same parent within ten years are aggregated. Customary occasional gifts remain tax-free under § 13 para. 1 no. 14 ErbStG.

Is it better for tax purposes to give the money to our son?

Your son is in tax class I and, under unlimited tax liability, has an allowance of 400,000 EUR per parent; your daughter-in-law is in tax class II with 20,000 EUR. In the family case with 150,000 EUR each from father and mother, the result is 0 EUR for the son and 52,000 EUR for the daughter-in-law. Whether a later transfer from your son to his wife is treated as a gift from you to your daughter-in-law remains open.

Does our daughter-in-law remain in tax class II after a divorce?

Under § 1590 para. 2 BGB, the relationship by marriage continues even after the marriage has been dissolved. However, § 15 ErbStG names only “the children-in-law” and does not refer to § 1590 BGB. The tax class of a former child-in-law therefore remains an open question.

Can we reclaim the money after a divorce?

The statutory grounds in §§ 528 to 530 BGB concern impoverishment of the donor and gross ingratitude, not divorce as such. For gifts from parents-in-law made for the sake of the child's marriage, the BGH applies the principles of the frustration of the basis of the transaction, without a schematic solution. Whether a claim exists in your case is not answered by this article.

Is real estate transfer tax payable if we give our daughter-in-law an apartment?

If you transfer the apartment yourself as a gift, the gift of real property is excluded under § 3 no. 2 GrEStG, except with regard to the value of conditions deductible for gift tax purposes. Under § 3 no. 6 sentence 3 GrEStG, the spouses of your children are treated equally with your children. For a purchase from an unrelated seller using gifted money, this equal treatment does not support an exclusion.

Assumptions, open questions and limits of this article

Assumptions: The family case is fictitious. Assumed are a gratuitous transfer between living persons, a purely domestic German case with unlimited tax liability under § 2 ErbStG, no earlier gifts, no tax exemption, a half-and-half attribution of the money from the parents' joint account and, for matrimonial property law, a marriage without a marriage contract.

Open questions that the wording read does not answer:

1. Whether a former child-in-law still falls under tax class II no. 5 after the child's divorce.
2. To whom, as donor, money from a joint account of the parents is to be attributed.
3. How a joint gift without any agreement is to be divided between the child and the child-in-law.
4. Whether, if the child passes the money on to their spouse, a gift from the parents to the child-in-law is assumed and how § 42 AO turns out in the individual case; whether the decision BFH II R 37/11 can be transferred to a cash amount.
5. How a transfer from the child to their spouse is to be classified under matrimonial property law.
6. Whether and to what extent a reclaim is possible after a divorce, which further legal bases come into consideration and when claims become time-barred; this also determines the amount by which a reclaim claim reduces the addition to the child-in-law's initial assets.
7. What gift tax consequences a reclaim would have.
8. Whether an earmarked cash gift for a specific property purchase is to be treated differently for gift tax purposes.

Not covered: foreign matters and limited tax liability, valuation of real property, exemptions for a family home, loans instead of gifts, compulsory portion consequences in detail and the consequences of failing to notify.

Sources: The basis is the statutory texts on gesetze-im-internet.de, each linked once, retrieved on 4 November 2026. In addition, BGH, judgment of 3 February 2010, XII ZR 189/06, and BFH, judgment of 18 July 2013, II R 37/11, on rechtsprechung-im-internet.de were evaluated. No further case law or administrative guidance was evaluated. Quotations from German statutes are non-official English renderings of the German wording.

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 allowances: general overview
• Gifts to children on special cases of transfers from parents to children
• Gifts from a child to the parents for the reverse direction
• 10-year period for gifts on the various periods surrounding a gift
• Gift not reported on the notification obligation in general
• Transferring a house on transferring a property during one's lifetime
• Topic page: Gifts

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