Schenkung Freibetrag 2026: Using 400,000 EUR per Child Every 10 Years

What is the Schenkung Freibetrag? Definition and function

The Schenkungsfreibetrag is the amount up to which a lifetime transfer remains tax-free. It is person-specific and therefore applies separately to each donor-recipient pairing. The amounts are set out in § 16 ErbStG, which applies identically to gifts and inheritances.

Complete Freibetrag table (§ 16 ErbStG)

Important: For inheritances, parents and grandparents enjoy higher allowances (100,000 EUR, tax class I). For lifetime gifts they fall into tax class II and only receive 20,000 EUR. This asymmetry between Schenkung and Erbschaftsteuer is frequently overlooked.

Allowance per child: 400,000 EUR every 10 years

Each child has a separate 400,000 EUR Freibetrag against each parent (§ 16 Abs. 1 Nr. 2 ErbStG). This is the central lever for tax-free asset transfers within the family. Deeper strategies for using this lever are covered in the guide Gifts to Children: Using Allowances and Saving Tax.

Per parent: double the allowance

Mother and father count as two separate donors. Each of them can give every child 400,000 EUR tax-free. For each child and parent couple, 800,000 EUR of Freibetrag is therefore available.

Calculation example: Family with two children. Father gifts child 1: 400,000 EUR. Mother gifts child 1: 400,000 EUR. Father gifts child 2: 400,000 EUR. Mother gifts child 2: 400,000 EUR. Transferred tax-free: 1,600,000 EUR within a single 10-year cycle.

Renewable every 10 years

After ten years, the Freibetrag starts afresh (§ 14 Abs. 1 ErbStG). Within this period, all gifts from the same donor to the same recipient are aggregated. The detailed rules on calculating the period and special cases such as care need or revocation are explained in the article 10-Year Period for Gifts: Care Cases, Revocation and Pflichtteil (statutory minimum share for close relatives in German inheritance law, § 2303 BGB).

Long-term planning: Anyone starting at age 50 can use the Freibetrag twice (at 50 and at 60) before the inheritance event occurs. For a parent couple with two children, that amounts to 3,200,000 EUR transferred tax-free over 20 years.

Gifts to grandchildren: how high is the allowance?

The allowance for grandchildren depends on whether the connecting parent is still alive.

Parent alive: 200,000 EUR

If the donor's child (i.e. the grandchild's parent) is still living, the grandchild's allowance is 200,000 EUR (§ 16 Abs. 1 Nr. 3 ErbStG).

Parent predeceased: 400,000 EUR

If the donor's child has already died, the grandchild moves into the position of the child. The allowance rises to 400,000 EUR (§ 16 Abs. 1 Nr. 2 ErbStG).

Generation-skipping gifts

By gifting directly to the grandchild, you skip a transfer step. That can be tax-advantageous when the child's allowance is already exhausted.

Example: Grandfather has already gifted 400,000 EUR to his son (allowance exhausted). A further gift to the son would be taxable. Instead, the grandfather gifts 200,000 EUR directly to the grandchild. Tax-free, because the grandchild's allowance is untouched.

Allowance for siblings and friends

Siblings, nieces, nephews, children-in-law and unrelated persons have an allowance of only 20,000 EUR. In addition, higher tax rates under § 19 ErbStG apply.

Tax rates for siblings and friends

For siblings (tax class II), rates start at 15 percent and rise to 43 percent. Friends and unrelated persons (tax class III) pay at least 30 percent, rising to 50 percent on large amounts. For the full overview of Schenkungsteuer (German gift tax, governed by ErbStG with the same brackets and exemptions as inheritance tax) rates and tax classes, see our guide Erbschaftsteuer 2026: Tables and Tax Classes.

Calculation example, siblings: Brother gifts sister 100,000 EUR. Allowance: 20,000 EUR. Taxable acquisition: 80,000 EUR. Rate: 20 percent (tax class II, bracket up to 300,000 EUR). Schenkungsteuer: 16,000 EUR.

Calculation example, friends: Gift to a friend: 100,000 EUR. Allowance: 20,000 EUR. Taxable acquisition: 80,000 EUR. Rate: 30 percent (tax class III). Schenkungsteuer: 24,000 EUR.

The 8,000 EUR difference in tax for the same gift amount shows how strongly the tax class drives the burden.

Gifts below the allowance: do they need to be reported?

Yes. The notification obligation exists regardless of whether the Freibetrag is exceeded. A 10,000 EUR gift to your child is also reportable.

What many people don't know

The notification obligation under § 30 ErbStG applies to every gift that goes beyond customary occasional presents. There is no value threshold below which the notification is dropped. The only exception is transfers that clearly do not constitute a taxable event (such as birthday presents within the usual range).

What counts as an occasional gift?

Birthday, Christmas or wedding gifts in a range that matches the life circumstances are not reportable gifts. There is no fixed value limit, but presents up to a few hundred euros should count as customary in most families. A car or a larger sum of money is not an occasional gift.

Notification obligation for gifts

The notification obligation is set out in § 30 ErbStG. Both the donor and the recipient are obliged to report. The deadline is three months from the date of the transfer.

What happens with non-notification?

Failing to notify is an administrative offence. In serious cases — particularly with large amounts and recognisable intent — it can be classified as tax evasion under § 370 AO.

Practical note: The notification is a short letter to the competent inheritance and gift tax office. It contains:

• Names and addresses of donor and recipient
• Family relationship
• Type and value of the transfer
• Date of the gift

The tax office uses the notification to decide whether to request a gift tax return. If the transfer stays below the Freibetrag, normally no tax assessment is issued. The notification is still necessary, because the tax office must be able to aggregate all transfers within the 10-year window.

When no notification is needed

The notification obligation falls away when the gift is based on a contract notarised or certified by a court (§ 30 Abs. 3 ErbStG). In that case the notary forwards the information directly to the tax office. This is typical for real estate transfers.

Using the Freibetrag strategically: the 10-year cycle

The 10-year cycle under § 14 ErbStG is the most important planning instrument for gifts. Within ten years, all transfers from the same donor to the same recipient are added together. After ten years, a new cycle begins with the full allowance.

Starting early pays off

Anyone who starts late reduces the number of usable 10-year cycles, and with them the number of available allowances. Someone aged 50 can statistically use the allowance three times (at 50, 60 and 70). Someone aged 70 only once. For a parent couple with two children, this difference can amount to 1,600,000 EUR of tax-free transfer. That is why gift planning belongs as a fixed component of any early succession planning.

Combination with Niessbrauch

For real estate transfers, a Niessbrauch reservation can substantially reduce the taxable value of the gift. The donor transfers ownership but retains the usage right (rental income, right to live in the property). The capital value of the Niessbrauch is deducted from the market value — the younger the donor, the higher the deduction.

Chain gifts: multiplying allowances

Assets can be moved through multiple stations to make use of different allowances. Father gifts to mother (500,000 EUR allowance), mother then gifts to the child (400,000 EUR allowance). The prerequisite: each recipient must be free to dispose of the received assets. A contractual onward-transfer obligation would be regarded by the Federal Fiscal Court (Bundesfinanzhof, BFH) as abusive structuring under § 42 AO. Practically relevant here is also the matrimonial property regime of the spouses — for details see the article Zugewinngemeinschaft (community of accrued gains, the default matrimonial property regime in Germany) and Inheritance: What Spouses Need to Know.

The Finanzgericht Rheinland-Pfalz, in its judgment of 17 December 2020 (Az. 4 K 1417/19), clarified the limits of chain gifting. When two property transfers are bundled into a single notarial deed and additionally agreed to be recorded "without intermediate entry" in the land register, these indicators point to a unified gift transaction. The tax office may then ignore the intermediary recipient and reach through directly to the final recipient — with the worse tax class as a consequence. In my advisory practice I see this mistake regularly in notarial contracts that wrap all transfers into a single deed.

Prior gifts cannot be forgotten

All transfers from the last ten years feed into the calculation. This includes cash gifts as well as:

• Interest-free loans (the interest benefit counts as a gift)
• Assumption of mortgages or liabilities
• Use-rights granted (such as rent-free housing, to the extent it goes beyond customary practice)
• Gifts of company shares (in particular within holding structures)

A concrete worked example: efficient family asset transfer in 2026

An anonymised client case from my advisory practice illustrates the interplay of allowances, tax classes and the 10-year cycle.

Starting point: Mueller family, both spouses aged 55, total assets of 2.4 million EUR (1.2 million EUR per spouse under the Zugewinngemeinschaft model). Two children (aged 28 and 30), one grandchild (aged 5, both parents alive).

Strategy 2026 (first cycle):

Strategy 2036 (second cycle, after 10 years):

The allowances reset. Identical transfers are tax-free again. Over 20 years, 4 million EUR can therefore be transferred tax-free — more than the current family wealth.

Comparison without planning: Without lifetime gifts, the assets would pass in a single step at the inheritance event. With 2.4 million EUR and only one-off allowances, the resulting Erbschaftsteuer would run into six figures. Ongoing gift planning conservatively saves between 200,000 and 350,000 EUR.

Three levers that made the difference in the Mueller case. First, the clean separation of donors — each spouse gifted out of their own share of assets (strictly halved under the Zugewinngemeinschaft model), which secured the doubling of allowances on solid legal ground. Second, the integration of the grandchild with their own 200,000 EUR allowance — no detour via the parents, and therefore no chain-gift risks. Third, the strict temporal staggering: each of the six gifts ran on a separate notarial deed and with a minimum gap of three months — preventing the tax authority from treating them as a single gift transaction under FG case law. The result: the Mueller family transferred 4 million EUR tax-free across 20 years and effectively reduced their Erbschaftsteuer burden to zero.

The Federal Fiscal Court, in its judgment of 8 May 2019 (Az. II R 11/17), clarified that under § 14 Abs. 1 Satz 1 ErbStG, prior acquisitions must be added to the latest acquisition at their materially correct values, without being bound by any tax assessment already issued for them. The tax office can therefore re-evaluate the value of a prior gift when assessing a later gift — even if the original assessment has become final. In practical terms: anyone who undervalued a prior gift will be caught up with at the second cycle at the latest, or at the inheritance event.

From my work with wealthy Frankfurt families I know this: the most common error lies in missing documentation — the allowances themselves are usually well known to clients. Gifts from within the 10-year window are discussed verbally rather than recorded properly, and at the second cycle the tax office reconstructs them from bank statements.

Common mistakes with gifts

1. Forgetting to notify: The 3-month deadline runs even for gifts below the allowance. Anyone who fails to notify risks an administrative-offence procedure. The article Gift Not Reported: Consequences and Late Filing explains what to do in that situation.
2. Prior gifts left out of the calculation: The tax office adds up all transfers from the last ten years. Forgotten prior gifts lead to unexpected tax assessments.
3. Wrong timing: Anyone making gifts too close to the inheritance event uses the allowance only once. Planning across 20 to 30 years doubles or triples the tax-free transfer volume.
4. Niessbrauch not registered: Without entry in the land register, there is no real right and no tax deduction.
5. No revocation right agreed: What happens if the recipient dies before the donor, becomes insolvent or gets divorced? Contractual revocation clauses offer protection.

Frequently asked questions

When does gift tax become payable and how high is it?

Schenkungsteuer becomes due as soon as the recipient's personal allowance is exceeded within ten years. The amount depends on tax class and the size of the taxable acquisition (§ 19 ErbStG). In tax class I (e.g. children), rates begin at 7 percent; in tax class III (friends) immediately at 30 percent. On a 500,000 EUR gift to a child, the taxable portion of 100,000 EUR is taxed at 11 percent — that is 11,000 EUR of Schenkungsteuer.

What gift tax allowances apply to spouses, children and grandchildren?

Spouses have a 500,000 EUR allowance, children 400,000 EUR per parent and grandchildren in principle 200,000 EUR (400,000 EUR if the connecting parent has already died). These amounts apply per donor-recipient pairing and renew every ten years.

How high is the gift tax allowance?

The Schenkungsteuer Freibetrag in 2026 ranges from 20,000 EUR (siblings, friends) up to 500,000 EUR (spouses). Children receive 400,000 EUR per parent. The governing provision is § 16 ErbStG. The allowance applies to every recipient against every individual donor and can be used afresh every ten years.

How high is the allowance for inheritance tax?

The Erbschaftsteuer allowances are identical to those for Schenkungsteuer (§ 16 ErbStG), with one exception: in an inheritance event, parents and grandparents receive 100,000 EUR rather than only 20,000 EUR. In addition, there are pension allowances for spouses (256,000 EUR) and children (graduated by age, up to 52,000 EUR). A full overview is available in the article Erbschaftsteuer 2026: Tables and Tax Classes.

Do I need to report a gift below 20,000 EUR?

Yes. The notification duty under § 30 ErbStG knows no lower value limit (apart from customary occasional gifts). Even a 5,000 EUR gift to your child must be reported to the tax office within three months. Otherwise, an administrative-offence procedure threatens — and in repeat cases even the accusation of tax evasion.

What happens if the donor makes multiple gifts within 10 years?

All gifts from the same donor to the same recipient are aggregated within 10 years (§ 14 ErbStG). Example: father gifts 250,000 EUR to the son in 2026, then another 200,000 EUR in 2030. Total 450,000 EUR. The 400,000 EUR allowance is exceeded. On 50,000 EUR, Schenkungsteuer at 7 percent (tax class I) becomes due — that is 3,500 EUR.

Can I split the allowance across several people?

Yes. The allowance is person-specific. Anyone with two children can gift each 400,000 EUR tax-free. Anyone additionally gifting grandchildren uses their own allowances (200,000 EUR). Using several allowances in parallel is a core principle of gift planning — and in many families the simplest way to avoid significant tax burdens.

Next steps

The allowances form the framework. The structuring within that framework decides how much wealth can be transferred tax-free.

Calculate with the Inheritance Tax Calculator what tax burden could arise in your specific case. Use the Inheritance Navigator for your personal checklist. Or book an initial consultation and we will go through your concrete family and asset situation together.

Related topics

• 10-Year Period for Gifts: The Three Deadlines and the Niessbrauch Hemmer — the key topic for gift strategy.
• Gifts to Children: Tax and Structuring — standard cases plus pitfalls.
• Gift Not Reported: Notification Duty and Voluntary Disclosure — when the notification was forgotten.
• Erbschaftsteuer Table: Rates by Tax Class — relevant once the allowance is exceeded.
• Berliner Testament (reciprocal will between spouses making each other sole heir and children residual heirs, § 2269 BGB): Templates and Pflichtteil — when gift structuring interacts with the will.

A personal conversation?

Using allowances optimally is craft. The expensive mistakes happen with Niessbrauch constructions, chain gifts, and the order of timing. A 30-minute initial consultation clarifies which sequence saves the most tax in your family and which pitfalls threaten.

Book a free initial consultation

External sources and statutes

• § 16 ErbStG at gesetze-im-internet.de — personal allowances for gifts and inheritances
• § 14 ErbStG at gesetze-im-internet.de — aggregation of prior acquisitions (10-year period)
• § 15 ErbStG at gesetze-im-internet.de — tax classes
• § 19 ErbStG at gesetze-im-internet.de — tax rates and hardship adjustment
• § 30 ErbStG at gesetze-im-internet.de — notification duty for gifts (3-month deadline)
• § 42 AO at gesetze-im-internet.de — abusive structuring
• BFH, judgment of 8 May 2019 — II R 11/17 — aggregation of prior acquisitions without binding effect of prior assessment
• BFH, judgment of 26 July 2023 — II R 28/22 — binding effect of real-estate value for gift tax assessments
• FG Rheinland-Pfalz, judgment of 17 December 2020 — 4 K 1417/19 — chain gifting: indicators of a unified gift transaction
• FG Rheinland-Pfalz, judgment of 23 November 2016 — 2 K 2395/15 — abusive structuring under § 42 AO in chain gifting of shares
• OLG Frankfurt, judgment of 29 May 2015 — 4 U 202/14 — notary liability in advisory structuring of chain gifts
• Federal Ministry of Finance — Inheritance and Gift Tax — official BMF overview

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