Temporary tax exemption for the donation of savings

Foreword
As a tax-related measure to abolish the anonymity of savings books, a tax exemption for the donation of savings books and similar banking products was introduced on July 8, 2000 (with (limited) retroactive effect). The BMF published details regarding the legal regulation in § 15, paragraph 1, item 19 of the ErbStG in a decree dated October 12, 2000.

Temporal scope of application
The tax exemption for donations applies to contributions made between July 8, 2000 and June 30, 2002, as well as to legal acts - under certain conditions - before the entry into force of this law.

Object of the grant
The term "deposits with domestic credit institutions and other claims against domestic credit institutions on which a banking business is based" includes:
- Savings deposits (premiums savings book, savings certificate, capital savings book), deposits in building savings accounts, term deposits, fixed deposits and sight savings deposits (checking account). Foreign currency deposits are treated the same as Schilling deposits (Euro deposits).
- Other claims against credit institutions are only tax-free if these claims are based on banking business.
An domestic credit institution also means the domestic branch of a foreign credit institution with domestic management.
The tax exemption for gifts exists regardless of whether the capital gains are subject to KESt or not.

People involved in the donation process
The exemption applies regardless of the amount of the benefit for natural and legal persons, except for private foundations, both to tax residents and to tax foreigners.

Exceptions from the gift tax exemption
· Donations and purposes for which funds are used for domestic and foreign foundations.
· Transfers from a giftgiver's current account to a gift receiver's current account or savings account (book money is transferred). However, if the current account is transferred as a whole, there is no tax liability.
· Cash donations, even when the withdrawal has been made from a savings account or a comparable bank product.

Cheque collection by the recipient of the gift.
· The indirect gift of an item. If a sum of money is given with the condition that a specified item be purchased, the gift tax is calculated on the value of the purchased item. For example, if a savings book is given to finance the purchase of a property, the gift tax for 2001 is calculated on the triple of the unit value of the property. What had previously meant a tax saving in this specific case now leads to an increase in tax.

· Donations that were already known to the financial authority by July 8, 2000, or were the subject of specific tax or financial criminal investigation. However, all of these previous requirements must have been made known to the taxpayer (e.g.: a concern or a request for additional information from the financial authority regarding the specific case; however, the submission of a tax declaration without comment or a mere general inquiry regarding the source of the funds is not sufficient).

· The tax exemption for gifts does not constitute an amnesty for black money. If a savings account is gifted that contains black money, the tax exemption for gifts will likely remain in place; however, the inflow of black money is subject to income tax and can lead to financial criminal prosecution.

Relationship to other tax exemptions for donations

Section 19, paragraph 3 of the ErbStG stipulates that each exemption applies independently. In addition to the tax exemption for the actual cash deposits, all other tax exemptions and tax allowances remain in effect. For example, the tax exemption of S 5 million for business gifts in accordance with § 15a of the ErbStG should be mentioned. Therefore, if there are corresponding cash deposits in the operating assets, the exemption for a business gift can be claimed in addition to the tax exemption. According to expert opinion, however, this is not applicable in the case of an inheritance.

Procedure for aggregating gifts within 10 years
Section 11 of the ErbStG standardizes the aggregation of gifts within 10 years for the purposes of progressivity calculation. The exemption provision of Section 15 (1) Z 19 prevents the relevant cash deposit gift from being included in the progressivity calculation without a time limit. This also precludes any subsequent tax burden on the tax-free acquisitions.

Restriction of the KESt reimbursement
In § 97, paragraph 4, Z 2 of the EStG, a final sentence was added by federal law on July 6, 2000, which prevents the KESt reimbursement insofar as such capital investments were subject to a tax-exempt benefit under § 15, paragraph 1, Z 19 of the ErbStG and a gift tax would have been imposed without the application of this exemption provision. This is intended to prevent the exemption from being applied to the present gift tax exemption, so that people who have no or low income (e.g., children, spouses, etc.) can receive a KESt reimbursement because their income tax rate is lower than the 25%% KESt.

Reports and obligations to provide information to the financial authority or notaries
· As a result of the repeal of § 25, paragraph 1, of the ErbStG, the reporting obligation for asset managers and banks with the financial authority regarding inherited assets no longer applies. However, a duty to provide information still exists in the event of inquiries from the authority or the notary as court commissioner during a succession proceedings. Anonymously held savings books and savings books with slogans are only to be reported upon request or upon presentation of the documents. On the other hand, name-saving books must be reported in any case.

· Despite the continued requirement to file a declaration under § 22 ErbStG, filing of the acquisitions under § 15Abs. 1 Z 19 may be omitted. There is also no obligation to record the transfer of the assets; however, it is useful for later evidentiary purposes. In the case of the donation of an already identified savings account, the name change with a date will suffice as evidence that the donation took place within the eligible timeframe; however, it is not sufficient as evidence of the donation process. This must be documented separately, preferably by a voluntary notification to the tax office with a stamp on the copy or with the notary.

Impact on the inheritance

Finally, a brief mention should be made of inheritance tax issues. There is no change regarding the final taxation, which will (hopefully) still apply for periods after June 30, 2002. It is pleasing that from 2001, shares will also be included in the final taxation if the shareholding remains below 1 percent. Less pleasing is that the abolition of anonymity for savings books will significantly increase notary fees. It will also be easier for nursing homes to collect outstanding fees from the savings funds of the deceased dependents. In the event of a community savings account, the balance will not be blocked in the event of inheritance. The allocation in the inheritance is based on the name of the heir; in case of doubt, it is based on the head of the household.

Final remark

Anyone who intends to take advantage of the tax exemption period should do so as soon as possible. There are constitutional concerns regarding this provision, because its retroactive effect could in particular violate the principle of equality. In fact, anyone who gave a savings account as a gift before July 8, 2000 and did not report the gift in a timely manner at that time will now be in a better position than those who report the gift in a legally compliant manner.

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