Gift agreement: when you need a notary and what goes in it

What is a gift agreement?

The law defines a gift as a disposition by which someone enriches another person out of their own assets, if both agree that the disposition is made free of charge (Sec. 516 (1) BGB). Three features must therefore come together:

1. Disposition from your own assets: money, a thing, a right or even the release from a debt.
2. Enrichment of the other person: their assets increase permanently.
3. Agreement that it is free of charge: both know and intend that there is no consideration in return.

The gift agreement is a contract between two parties, but it only obliges the donor. The recipient must accept; they owe nothing unless the gift is subject to an obligation (Auflage). If the disposition was made without the recipient's will, the donor can set them a reasonable deadline to declare whether they accept. If they remain silent until it expires, the gift is deemed accepted; if they refuse, they must return what they have received (Sec. 516 (2) BGB).

It is not a gift if someone disclaims an inheritance or waives an acquisition for the benefit of another person (Sec. 517 BGB).

Immediate gift or promise of a gift: the decisive difference

Whether you need a notary depends on one question: is the gift handed over immediately or only promised?

	Immediate gift (Handschenkung)	Promise of a gift (Schenkungsversprechen)	Plot of land, flat
When	the gift is handed over or transferred straight away	the donor undertakes to perform later	ownership of land is to pass
Form	none	notarisation of the promise (Sec. 518 (1) BGB)	notarisation of the entire contract (Sec. 311b (1) BGB), plus conveyance and land register (Sec. 873, 925 BGB)
Without the form	valid	void (Sec. 125 BGB), cured as soon as performance is made (Sec. 518 (2) BGB)	void, cured only on conveyance and registration (Sec. 311b (1) sentence 2 BGB)
Claim of the recipient	not applicable, they already have the gift	enforceable in court if notarised	enforceable in court if notarised
Example	grandmother transfers €5,000 to her grandson when he starts university	father promises his daughter €30,000 for her wedding next year	parents transfer the house to their son

Is a gift agreement valid without a notary?

Yes, in most everyday cases. A gift that is completed immediately is valid without any form, even orally or tacitly. This applies to a gift of money for a birthday just as much as to a car that you hand over with the keys and papers.

You need a notary in three cases:

• Promise of a gift: You undertake today to give something later. Only your promise has to be notarised, not the acceptance (Sec. 518 (1) BGB). A promise signed privately is void (Sec. 125 sentence 1 BGB). However, the defect of form is cured as soon as you actually make the promised performance (Sec. 518 (2) BGB). For money, this is the case at the latest when the amount is credited to the recipient's account.
• Plot of land or freehold flat: Here the entire contract must be notarised, not just your part (Sec. 311b (1) BGB). Ownership only passes on conveyance (Auflassung) before the notary and registration in the land register (Grundbuch) (Sec. 873, 925 BGB).
• Entire assets: If you undertake to transfer all of your present assets or a fraction of them, notarisation is also required (Sec. 311b (3) BGB). A contract about future assets is even void (Sec. 311b (2) BGB).

A gift agreement never has to be handwritten. There is no statutory written form for a gift. Only a private will has to be written and signed in your own hand (Sec. 2247 (1) BGB), not a gift agreement.

When a written gift agreement makes sense

Even though an immediate gift is free of form, there is a lot to be said for a written contract once the value is noticeable.

• Evidence: Disputes can arise later about whether money was given as a gift or only lent. The contract records what was intended.
• Tax office: The recipient and the donor must report a taxable gift within three months (Sec. 30 (1), (2) ErbStG). The contract proves the value, the date and the family relationship.
• Rights to reclaim: The law only allows a gift to be reclaimed in a few cases. Further grounds, such as insolvency of the recipient or resale, only apply if you agree on them.
• Compulsory share and siblings: Whether a gift is later to be credited against the compulsory share or equalised among siblings must be determined by you when you make the gift (Sec. 2315 (1), Sec. 2050 (3) BGB). It can no longer be done unilaterally afterwards.

What goes into a gift agreement: clauses explained

Templates from the internet cover the simplest case. The clauses that matter in a dispute are often missing or do not fit. You should know these building blocks:

Clause	What it is for	What to look out for
Parties	who gives, who receives the gift	full names, dates of birth, addresses; for minors, the representation
Subject matter	what exactly is given	so precise that nobody can be in doubt: amount and account, vehicle identification number, serial number
Agreement that it is free of charge	makes the contract a gift	clearly distinguish it from a loan or payment for services
Completion	when and how it is handed over	date, handover of keys, papers, bank transfer; for later performance, a notary
Obligation (Auflage)	duty of the recipient to use the gift in a particular way	word it in measurable terms; set out the consequences of non-performance (Sec. 525, 527 BGB)
Right to reclaim	return in agreed cases	name the cases specifically; set out emoluments, expenditure and costs (withdrawal: Sec. 346 BGB)
Crediting against the compulsory share	later reduces the recipient's compulsory share	must be determined when the gift is made (Sec. 2315 BGB)
Equalisation among siblings	the gift is set off against the share of the inheritance	applies to normal gifts only if directed (Sec. 2050 (3) BGB)
Gift tax	who bears the tax	both owe it to the tax office (Sec. 20 (1) ErbStG); agree internally who pays
Defects and liability	what applies if the gift has defects	by law, the donor is only liable to a limited extent (Sec. 521, 523, 524 BGB)

With a right of withdrawal, the recipient must also hand over emoluments drawn, such as rental income (Sec. 346 (1) BGB). Set this out expressly.

Special forms of gift

Gift subject to an obligation

The donor links the gift to a duty of the recipient, for example: €40,000 for the purchase of a flat. Once the donor has performed, they can demand that the obligation is carried out (Sec. 525 (1) BGB). If it is not, they can reclaim the gift under the conditions for withdrawal, insofar as it should have been used for the obligation (Sec. 527 (1) BGB).

Mixed gift

Part is paid for, part is given, for example a car worth €20,000 that is sold to the nephew for €5,000. How such contracts are treated in law, for example when reclaiming, depends on which part predominates. Record in the contract which value is to be given as a gift.

Gift in the event of death

If a promise is made on condition that the recipient survives the donor, the provisions on dispositions upon death apply (Sec. 2301 (1) BGB). If the donor completes the gift during their lifetime, the normal rules on gifts apply (Sec. 2301 (2) BGB).

Endowment for children

What parents give a child with a view to marriage or to establishing an independent position in life is an endowment (Ausstattung). It only counts as a gift insofar as it exceeds the level appropriate to the parents' financial circumstances (Sec. 1624 (1) BGB). If descendants inherit as statutory heirs, they must equalise an endowment among themselves unless the parents directed otherwise when making it (Sec. 2050 (1) BGB).

Gift agreement for money, a car, an animal and real estate

Money and cash

A bank transfer with the reference "gift" is a completed immediate gift. A contract is not necessary, but it helps as evidence. With cash, proof is more difficult: record the amount, date and handover in writing and have the recipient confirm receipt.

Car

Ownership passes when you agree and you hand over the car with the keys and the registration certificate part II (Zulassungsbescheinigung Teil II) (Sec. 929 BGB). A notary is not necessary. The recipient must have the car re-registered without delay with proof of insurance; the previous keeper and owner must report the change of keeper if the recipient has not already done so (Sec. 15 (5) FZV). A short contract with the vehicle identification number, mileage and known defects protects both sides.

Dog, horse and other animals

Animals are not things, but the rules on things apply to them accordingly (Sec. 90a BGB). The gift is therefore valid without any form on handover. A provision on vet and keeping costs from the handover and on known illnesses makes sense, because the donor is only liable for concealed defects in the case of fraudulent intent (Sec. 524 (1) BGB).

House and flat

For real estate, the gift agreement is a notarised transfer agreement (Übergabevertrag), often with usufruct (Nießbrauch) or a right of residence (Wohnrecht) for the parents. As a rule, no real estate transfer tax is payable on gifts, but it is payable on the value of certain obligations (Sec. 3 no. 2 GrEStG). We explain the procedure, costs and pitfalls in the guide Transferring a house, and the reserved rights in the guides Usufruct and Lifelong right of residence.

Gifts to children and minors

For minors, it depends on their age and the type of gift:

• Children under 7 lack legal capacity (Sec. 104 no. 1 BGB). Their parents accept the gift for them.
• Children aged 7 and over can accept a gift themselves if it only gives them a legal advantage (Sec. 107 BGB), for example money without an obligation.
• Gifts that are not merely advantageous, for example a let flat with landlord's duties or a gift subject to an obligation, require the consent of the legal representative.

If the parents themselves or the grandparents make the gift, the parents may not represent the child in such a disadvantageous transaction (Sec. 181 BGB; Sec. 1629 (2) sentence 1 in conjunction with Sec. 1824 (1) no. 1 BGB). The family court (Familiengericht) then appoints a supplementary curator (Ergänzungspfleger) (Sec. 1809 (1) BGB). According to case law, this bar does not apply to a purely advantageous gift from the parents to their own child. If the child acquires a freehold flat free of charge, the approval of the family court is also required (Sec. 1643 (1) in conjunction with Sec. 1850 no. 4 BGB).

Conversely, parents cannot make gifts out of their child's assets in the child's name, except customary gifts (Anstandsgeschenke) (Sec. 1641 BGB).

Reclaiming or revoking a gift

A completed gift is final in principle. Exceptions:

Ground	Provision	Time limit or restriction
The donor can no longer pay for their reasonable maintenance (impoverishment)	Sec. 528 (1) BGB	excluded if ten years have passed since the gift was made when the need arises, or if the donor caused the hardship intentionally or through gross negligence (Sec. 529 (1) BGB)
Gross ingratitude through serious misconduct towards the donor or close relatives	Sec. 530, 531 BGB	revocation excluded after forgiveness or one year after gaining knowledge; no longer possible after the death of the recipient (Sec. 532 BGB)
The obligation is not performed	Sec. 527 BGB	under the conditions for withdrawal, only insofar as the gift was intended for the obligation
Promise not yet fulfilled, the donor is in need	Sec. 519 BGB	the donor may refuse performance as long as their maintenance is at risk
The basis of the gift has ceased to exist	Sec. 313 BGB	individual case, adjustment takes priority over return
Contractually agreed right to reclaim	contract, Sec. 346 BGB	as agreed

In the case of impoverishment, the recipient can avoid having to return the gift by paying the necessary maintenance (Sec. 528 (1) sentence 2 BGB). They also do not have to hand it over insofar as their own maintenance would otherwise be at risk (Sec. 529 (2) BGB). If the social welfare office (Sozialamt) pays, for example for care, it can transfer the claim to reclaim the gift to itself by written notice (Sec. 93 (1) SGB XII). Gifts made out of moral duty or decency, for example usual presents for birthdays or Christmas, are excluded from reclaiming and revocation (Sec. 534 BGB).

Gross ingratitude can include, for example, violence or a deliberately false criminal complaint; you declare the revocation to the recipient (Sec. 531 (1) BGB).

Liability of the donor: They are only liable for intent and gross negligence (Sec. 521 BGB), and for material defects and defects of title in principle only if they fraudulently concealed them (Sec. 523 (1), 524 (1) BGB).

Gifts, compulsory share, inheritance and creditors

• Compulsory share: Persons entitled to a compulsory share (Pflichtteil) can demand a supplement as if the gift were still part of the estate (Sec. 2325 (1) BGB). The gift counts in full in the first year before the death, one tenth less in each further year, and not at all once ten years have passed since the gift was made (Sec. 2325 (3) BGB). If a gift of €100,000 was made three years and two months ago, €70,000 still counts. For gifts to the spouse, the period does not begin before the marriage is dissolved. If the donor reserves the usufruct, according to case law the period does not, as a rule, begin to run (see Usufruct). Details in the guides Compulsory share supplement and Compulsory share.
• Contract of inheritance and joint will: A testator who is contractually bound and makes a gift in order to disadvantage the contractual heir risks the heir demanding the gift back after the death (Sec. 2287 (1) BGB). More on drafting in the guide Writing a will.
• Creditors and insolvency: Creditors can challenge gratuitous performances within four years (Sec. 4 (1) AnfG); in the donor's insolvency, the same period applies before the petition to open proceedings (Sec. 134 (1) InsO). Customary occasional gifts of low value are excluded.

Gift tax in brief

Gifts are subject to gift tax. Tax only becomes payable once all gifts from the same person within ten years exceed the tax-free allowance (Sec. 14 (1) ErbStG).

Recipient	Tax class	Tax-free allowance
Spouse, registered civil partner	I	€500,000
Children, stepchildren, children of deceased children	I	€400,000
Grandchildren	I	€200,000
Great-grandchildren	I	€100,000
Parents, siblings, nieces, nephews, children-in-law, parents-in-law, divorced spouse	II	€20,000
everyone else, including unmarried partners	III	€20,000

Basis: Sec. 15 (1), 16 (1) ErbStG. Above the allowance, the tax rates are between 7 and 50 per cent depending on the class and value (Sec. 19 (1) ErbStG). The tax is owed by the recipient and the donor (Sec. 20 (1) ErbStG). The report to the tax office within three months is not required if the gift has been notarised (Sec. 30 (3) sentence 2 ErbStG). For specific tax planning, you should consult a tax adviser.

What does a gift agreement cost?

Without a notary, a contract you draw up yourself costs nothing. Drafted by a lawyer from Recht 24/7, it costs €499 at a fixed price including VAT.

With a notary, the costs are governed by the Court and Notary Fees Act (GNotKG). The notarisation of a contract incurs a 2.0 fee, at least €120 (no. 21100 KV GNotKG); this also applies if only the offer to conclude the contract is notarised (preliminary remark 2.1.1 no. 1 KV GNotKG). What counts is the value of the gift (Sec. 97 (1) GNotKG), and the fee follows Table B (Sec. 34 GNotKG).

Value of the gift	2.0 fee net
€10,000	€150.00
€25,000	€230.00
€50,000	€330.00
€100,000	€546.00

Based on our own calculation from Table B (Annex 2 GNotKG). Example: A notarised promise of a gift of €50,000 costs a fee of €330.00, plus €20.00 flat rate for postage and telecommunications (no. 32005 KV GNotKG: 20 per cent, at most €20), together €350.00 net. With 19 per cent VAT (no. 32014 KV GNotKG, Sec. 12 (1) UStG), that comes to €416.50, plus copies and certified copies (€0.15 per page, no. 32001 KV GNotKG). For real estate, completion and the land registry are added; a fully calculated example can be found in the guide Transferring a house.

The notary ascertains the intention of the parties and advises them on the legal implications of the transaction (Sec. 17 (1) BeurkG). Whether the draft contains everything that matters to you, such as a right to reclaim, you can have checked by a lawyer before the appointment.

Checklist before signing

• Is it clear whether the gift is handed over immediately or promised for later? For a promise and for real estate: notary.
• Is the subject matter described unambiguously?
• Do you need a right to reclaim, for example for insolvency, divorce or the recipient dying first?
• Should the gift be credited against the compulsory share or equalised among siblings?
• Is the recipient a minor and is the gift not merely advantageous? Then clarify the supplementary curator.
• Who pays any gift tax, and who reports the gift to the tax office?
• Are supporting documents attached, such as a bank statement or a handover record?