Does a donation have to be recorded in writing?

Donation and gift

A donation and a gift are gifts from one person to another. But what exactly is a donation? And what is a gift? What are the differences?

The concept of 'donation' and the concept of 'gift'

A gift is legally defined as an agreement without consideration, with the intention that the recipient will become richer and the donor poorer. A simple example is a father gifting €5,000 or a specific item like a watch to his child. This gift agreement obligates the father to give the child a sum of money or the watch, and the child does not have to pay the donor anything for what he receives.

The concept of "gift" is broader than that of "donation." A gift is any act that enriches one person at the expense of another's wealth. This doesn't necessarily have to be a contract, as with a gift. Moreover, a gift can involve an agreement that stipulates that the recipient must provide something in return. A gift can occur, for example, when a car is sold for too low a price. If a car worth €10,000 is sold for €5,000, this constitutes a gift of €5,000.

A donation does not (usually) have to be 'on paper' for it to be valid, but it does provide proof

Just because a gift is an agreement doesn't mean it has to be put in writing. An agreement is, in principle, "form-free" and can therefore also be entered into orally. To prove that a gift has actually been made and for what amount, it is, of course, wiser to put this in writing.

For certain gifts, the law does impose additional formal requirements. These are gifts intended to take effect only upon the donor's death, known as "gifts on paper" (also called "gifts in connection with death"). In that case, the gift must be personally recorded in a notarial deed by the donor. If this is not done and the donor dies, the gift is cancelled. A later article in Met Recht Geregeld will address this special type of gift in detail.

A gift or donation as an advance on the inheritance: should it be included in the estate?

When a gift or donation (hereinafter both referred to as a "gift") is made as an advance on the inheritance the recipient will receive from the donor in the future, the recipient may be required to contribute the gift to the donor's estate in due course. This can be particularly helpful in the following situations:

that a donor wants to treat his children equally.

Example

Piet received a tax-free gift of €100,000 from his mother. His sister Joke did not receive a gift. His mother can rectify this by leaving an additional amount to Joke in her will. However, this is subject to inheritance tax, while Piet's gift was tax-free. To ensure equal treatment for the children, the mother can stipulate when making the gift that Piet must include it in her estate upon her death.

The donor must specify the obligation to contribute the gift when making the gift or include it in their will. A will can also waive an obligation to contribute (imposed upon the gift)

for example due to changed circumstances.

Incidentally, a different rule applies to gifts made before January 1, 2003. Back then, a different legal provision stipulated that a gift always had to be contributed, unless the donor, for example, had stipulated in their will that this obligation no longer applied; the opposite of what now applies to gifts. So, be careful with old gifts to determine whether the contribution obligation still applies or whether it was later lifted!

Exclusion clause and administration

When making a gift, the donor can stipulate that the gift will not become part of the marital community of the recipient/beneficiary and their spouse. This is also called the "exclusion clause." The donor can also stipulate that the gift be placed under a trust. Under this trust, the gift is managed for a specified period by the trustee, not by the recipient.

Gift tax

Gift tax is due on a gift made by a donor residing in the Netherlands if the value of the gift exceeds the annual exemption. A gift from a parent to a child has a higher annual exemption than a gift to, for example, a good friend or a sibling. The annual exemptions are recalculated annually by the Dutch Tax and Customs Administration. If the combined value of all gifts from the same donor in the same calendar year exceeds the exemption for that year, the recipient must file a gift tax return via the website.

from the Tax Authorities.

You may receive a gift that you must spend on a private home. In that case, under certain conditions, you can take advantage of a special, one-time gift tax exemption of more than €100,000 for your home. In that case, you must also file a gift tax return and claim this exemption in your tax return.

Summary and tip

A gift is always a gift, but a gift is not always a gift. A gift is an agreement without consideration (for example, a father who gives €5,000 to his child), while a gift is any act – possibly with consideration – that makes one person richer at the expense of the other's assets (for example, a father who sells a car worth €10,000 to his child for €5,000). A gift can also be agreed upon orally and does not necessarily have to be recorded in writing. For evidentiary purposes, a written agreement is advisable. For a gift that is intended to be paid only upon the donor's death,

works, the requirement applies that these must be personally recorded in a notarial deed by the donor.

For every gift or donation, it can be stipulated that it must be "contributed to the donor's estate." This means that the gift must serve as an advance on the inheritance, and that the recipient will therefore receive less from the actual inheritance upon the donor's death. The donor can also stipulate, by including an "exclusion clause," that the gift will not become part of the marital community in which the recipient is married or (possibly later) will marry. A gift can also be placed under administration. A recipient who receives a gift with a value exceeding the annual exemption must file a gift tax return via the Tax and Customs Administration website. If the gift is for a private residence, a one-time increased gift tax exemption can be claimed in the tax return under certain conditions.

Would you like more advice on this topic? Also, check out the "Donation" section on our website , stop by, or give us a call. The consultation is free. To schedule an in-office consultation or a video call, please call +31 (0)10 44 53 777. We look forward to seeing you.

This article is taken from 'Met Recht Geregeld' (www.metrechtgeregeld.nl), a product of FBN Juristen.

FBN Juristen and MAES civil-law notaries take the utmost care with the content of the articles, but accept no liability for incompleteness or inaccuracy of an article, nor for the consequences thereof.