The distinction between a present (or: occasional gift) and a taxable gift is not always clear. We have therefore set out here in brief the characteristics of an occasional gift and how it differs from a taxable gift.
What is an occasional gift?
An occasional gift is a present that is usually given at the time of a special event, such as Christmas, New Year, a birthday, wedding or graduation. That means it is part of a social custom or tradition.
Occasional gifts are exempt from gift tax, provided the gift is proportionate to the donor's assets. For some people, a Christmas gift of several hundred euros may be quite normal, while for others that could raise questions, particularly if it is not customary to gift such large amounts.
The 1% rule as a practical guideline
The law does not specify when an occasional gift is in proportion with the person’s assets. In practice, people often use the 1% rule: You are allowed to give away about 1% of your total assets each year in occasional gifts (this applies to all the recipients combined).
Example: your total assets are €500,000. You want to give Christmas gifts to your two children and four grandchildren. The tax authorities usually accept that you would give around €5,000 as a gift. So, for example, you might give €2,000 to each child and €250 to each grandchild.
So what is the difference with a taxable gift?
Unlike an occasional gift, a taxable gift does not have to be linked to a special occasion. A gift of this kind can be made at any time and it also does not have to be proportional to the donor’s total assets. What is the biggest difference? A taxable gift requires the beneficiary to accept it.
Does it then automatically come within the scope of gift tax? Not at all: a gift (of movable assets) is not necessarily made through a notary. A simple bank transfer can also constitute a taxable gift.
Although we pay 3% gift tax on a notarised donation of movable property (that is the flat rate in Flanders and Brussels for a taxable gift of movable property made to first-degree relatives and between partners, while in the Walloon region it is 3.3%), a simple bank transfer (also known as a bank gift) does not incur gift tax).
Please note: non-registered taxable gifts, such as a bank gift, that are made within five years before your death still become subject to inheritance tax upon your death (effective from 1 January 2026 the period for this in the Brussels Capital Region has also been extended to five years). This five-year period is also better known as the 'suspect period'.
Practical tips for your bank gift
Do you still want to make a bank gift? If so, prepare the necessary documents (a letter of intent and pacte adjoint) to substantiate your private gift. These documents allow you to register the bank gift in extremis (e.g. if you fall ill within the five-year period) and therefore pay gift tax.
If a person dies within the five-year period, the gift has already been definitively taxed at the low flat rate of gift tax and it escapes from the scope of the higher inheritance tax rates (as high as 27% in Flanders and 30% in Brussels/Wallonia for first-degree relatives and between partners).
In addition, make sure you include a neutral message, such as "Merry Christmas", with the transfer. Avoid terms like "Taxable gift" or "Advance on inheritance" and be sure to keep a copy of the transfer document.
How can Grant Thornton help?
An envelope under the Christmas tree is the perfect gift, as long as the amount is not excessive.
Are you unsure whether your Christmas present is at risk of being classified as a taxable gift? We are happy to look at this with you so that you can face the festive season with no worries.
Meanwhile, we wish you a happy and tax-friendly Christmas season!
