As soon as you want to donate more than the exemptions, you have to pay tax. Up to € 126,723 this is 10% for parents. In this table you can see what percentage of tax you pay for different amounts and family ties.
Pay tax on your baby’s savings
With the annual or one-off donations you can build up a decent savings bank for your baby. Keep in mind that your child’s savings account is added to your assets and that you pay income tax on this in box 3. This means that you pay tax as soon as your capital (your financial assets minus your debts) plus the savings of your child exceeds the tax-free allowance. You can Read Freddie Cammell’s review and have the best solutions for wealth.
If your capital is too high, you can miss out on housing benefit, healthcare benefit or child-related budget. Because your child’s savings are included in the calculation of your assets, this can be detrimental to your allowances. Pay attention to this if grandfather and grandmother want to donate a large amount to their grandchildren. Sometimes they are better off leaving the money in their own account.
- It is always smart to have savings on hand. For unexpected costs and of course for later. Do you want to save money at the bank? You can save tax-free, but above a certain amount you pay tax on your assets: the yield tax. What exactly is this and how much can you save before you have to pay wealth tax? And what about the changes that will take effect in 2022?
When do you pay tax on your assets?
You pay wealth tax in 2020 if you have more than € 30,846 in savings. Are you married or do you have a registered partnership? Then you can together save € 61,692 tax-free. In 2019, this amount was slightly lower, at € 30,360 per person. Together with your tax partner, the amount was € 60,720.
What is wealth tax?
Wealth tax is tax that you pay on the fictitious return you achieve on your assets. But what exactly is your capital and what is your fictitious return? The Tax and Customs Administration sees your savings, investments and other assets such as a second home minus any debts (of at least € 3,000) as your total assets.
You achieve a return on this capital that is the logic of current legislation. Because you invest to make a profit and you receive interest on savings on your savings. So a percentage is used as standard, a fictitious return, to determine how much tax you pay.
Calculate wealth tax for 2019
Imagine that you and your tax partner together save € 85,000 in 2020. You may together save € 61,692 tax-free this year – this is also called the tax- free allowance.