Facts of the case:
A husband transferred assets from his individual account/individual securities deposit at a Swiss bank to his wife.
The tax office classified this as a gratuitous transfer from the husband to his wife = a gift, and assessed gift tax on it.
However, from the wife's perspective, half of the assets already belonged to her prior to the transfer, and she took the view that she had only been enriched in the amount of half of the assets. The wife filed suit – without success.
View of the Bundesfinanzhof (BFH):
In its judgment of 29 June 2016 (AZ II R 41/14), the BFH upheld the dismissal of the action.
A gift-taxable transfer between spouses therefore also exists where one spouse transfers the balance of their individual account or individual securities deposit to the other spouse, unless the spouse to whom the assets were transferred can prove that half of the assets were already attributable to them prior to the transfer.
In the view of the BFH, the recipient spouse – in this case the wife – bears the burden of proof for facts that would preclude the assumption of a gratuitous transfer. The same applies to circumstances intended to show that the credit balance which the other spouse received as a gratuitous transfer from their spouse's individual account was, in the internal relationship, already wholly or partially attributable to that spouse prior to the transfer.
Judgment concerns individual accounts, not joint accounts:
The BFH decision concerns individual accounts; joint accounts of the spouses are not affected. Account authorisations for individual accounts are likewise irrelevant for gift tax assessment.
Frequently asked questions
Frequently asked questions
Is the transfer from an individual account to a spouse subject to gift tax?
Yes. According to the BFH ruling of 29 June 2016 (II R 41/14), transferring assets from one spouse's individual account or securities deposit to the other spouse generally constitutes a gratuitous gift and is subject to gift tax. This applies even if the spouses consider the assets to be jointly owned in economic terms.
Who bears the burden of proof that no gift between spouses has occurred?
The burden of proof lies with the recipient spouse, i.e. the person to whose account the assets were transferred. They must demonstrate that the funds were already attributable to them, in whole or in part, in the internal relationship prior to the transfer. If this proof cannot be provided, the entire transfer is deemed a gift.
Does the gift tax liability also apply to joint accounts held by spouses?
No, the BFH ruling exclusively concerns individual accounts and individual securities accounts. Joint accounts held by spouses are not covered by this case law and are assessed differently for gift tax purposes.
Does a banking power of attorney play a role in the gift tax assessment of an individual account?
No, powers of attorney for individual accounts are irrelevant for gift tax purposes. The mere authority over a spouse's account does not establish a beneficial co-entitlement to the assets.
How can a spouse prove that parts of the assets already belonged to them prior to the transfer?
The recipient spouse must demonstrate, through documentation and verifiable circumstances, that the balance was attributable in whole or in part to them in the internal relationship—for example, by providing proof of origin for their own deposits or clear agreements. Without such evidence, the tax office will presume a full gratuitous transfer.