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Tax guidelines and regulations for large money transfers into Europe
Both you and your recipient may be required to file.
If your recipient lives in a country with a gift tax or if you’re sending money for business purposes, they may be required to pay taxes on the transfer. And you may be required to report it on your yearly tax return in the US — regardless of whether or not you owe anything.
How Europe regulates large remittances
Each country in Europe has its own laws on gift taxes — the tax you or your recipient pays when you gift money or property whose value is above a specified amount. Some countries exempt gifts from the burden of taxation altogether, while others consider the relationship of you to your gift beneficiary.
If the money is for business purposes, such as purchasing goods or receiving advice, your recipient will likely have to report it on their taxes as foreign income.
Here’s a general rundown of how European countries handle the gift tax.
|Country||Gift size exempt from taxation
|Albania||No gift tax|
|Andorra||No gift tax|
|Armenia||No gift tax|
|Austria||No gift tax|
|Azerbaijan||Exempt from gift tax if received from family members|
|Belarus||Tax law provides exemption for inheritances and partial exemption for general gifts|
|Belgium||3% to 30% of the gift amount|
|Bosnia and Herzegovina||2% to 10% of the gift amount|
|Bulgaria||0.4% to 0.8% on inheritances from family members and 3.3% to 6.6% for other beneficiaries|
|Croatia||5% if gift is worth more than 50,000 HRK|
|Cyprus||No gift tax|
|Czech Republic||1% to 40% depending on degree of family relationship|
|Denmark||No gift tax|
|Estonia||No gift tax|
|Finland||€1 to €4,999|
|France||5% to 45% of gift amount, depending on degree of relationship
|Georgia||No gift tax, though inheritance taxes depend on degree of relationship|
|Germany||Remote relatives or family typically pay higher taxes|
|Greece||Varies by relationship of gifter to giftee|
|Hungary||2% to 40% of gift amount, depending on degree of relationship|
|Iceland||Gifts for special occasions are exempt provided they’re “not of extraordinary value”|
|Ireland||Varies by relationship of gifter to giftee|
|Italy||Up to 1 million euros exempt for spouses, children and grandchildren|
|Kazakhstan||No gift tax|
|Latvia||No gift tax|
|Liechtenstein||No gift tax|
|Lithuania||€2,500 provided that gifts come from close relatives|
|Luxembourg||0% to 48% of gift amount, depending on relationship to beneficiary|
|Macedonia||2% to 5% of gift amount, depending on relationship to beneficiary|
|Malta||No gift tax|
|Moldova||No gift tax|
|Monaco||Rates vary depending on relationship to beneficiary|
|Montenegro||No gift tax|
|Netherlands||Exempt up to 4,479 euros, depending on relationship to beneficiary, or up to 22,379 euros once in a child’s lifetime|
|Norway||No gift tax|
|Poland||Rates vary by relationship of donor to donee|
|Portugal||No gift tax|
|Romania||No gift tax|
|Russia||No gift tax|
|San Marino||Up to 1 million euros exempt for spouses, children and grandchildren|
|Serbia||1.5% to 2.5%, depending on relationship to beneficiary|
|Slovakia||No gift tax|
|Slovenia||€5,000 for immediate successors|
|Spain||7.65% to 34.00%, depending on value and relationship to beneficiary|
|Sweden||No gift tax|
|Switzerland||No gift tax|
|Turkey||10% to 30%, depending on the gift’s value and relationship to beneficiary|
|Ukraine||No gift tax|
|United Kingdom||No gift tax
|Vatican City||Up to 1 million euros exempt for spouses, children and grandchildren|
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What are the penalties in Europe if my recipient fails to file?
Just as US citizens are required to submit annual tax returns, so too are citizens of most European countries. If your recipient fails to declare a large remittance on their tax returns, they could face stiff financial penalties and even jail time.
In a post-9/11 world, financial institutions and independent transfer specialists are required to record the source of large transfers and report suspicious deposits to the government, which means that if your recipient doesn’t list a transfer on their taxes, it will likely be found out. Encourage your family and friends in Europe to declare large gifts to avoid further trouble down the road.
Do I have to report large transfers out of the US?
Yes. If you’re sending more than $10,000 for business purposes or $15,000 as a gift, or if you’re sending money to an overseas account in your name, you’ll likely be required to report it to the government.
By law, banks report all cash transactions that exceed $10,000 — and any transaction of any amount that alerts their suspicions. Independent money transfer specialists are sometimes required to report at thresholds as low as $1,000.
To avoid the severe penalties (including jail time) that could come with a failure to report large sums of money out of the country, speak with a professional to guarantee that everything is above board and complies with the laws of all countries involved.
Sending a lot of money out of the country? Know what the IRS expects of you.
How much money can I send to Europe?
The US government doesn’t put a cap on how much money you can send overseas. But some transfer providers do, so choose a limit-free provider like XE if you’re planning a large transfer.
How my recipient in Europe get the money?
Depending on which provider you choose, your options include bank-to-bank transfers, cash pickups and transfers to mobile wallets.
If your loved one or associate is picking up the cash in person, they may need to show government-issued ID or a transaction confirmation number to prove they’re your intended recipient. For electronic transfers, they may not need to provide any additional information.
Confirm with your bank or independent money transfer provider the exact information your friends and family might need to receive your funds.
If you’re initiating a large overseas transfer, both you and your recipient may be required to report it on your taxes — and depending on which country they live in, they may need to pay a gift tax or report it as foreign income.
As with all international money transfers, compare providers to get the best deal before initiating a transfer, and be protect yourself from fraud by only sending money to people you know. Using a reputable provider can safeguard you from potential scams.
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