Invitation to a Luxurious Cruise Subject to Gifts Tax

Gifts are subject to taxation when the value is more than € 35 (§4 V 1 no. 1 EStG). In this case, the plaintiff received an invitation to luxurious cruise on the world’s seven seas. The tax office wanted to assess taxes on this gift. Since the plaintiff did not agree with the idea of being taxed, the Fiscal Court Hamburg had to rule on the issue in its judgment of June 12, 2018 (re 3 K 77/17).

Tax Office saw Gift and Wanted Tax

Guido and his partner Bettina spent a five-month cruise around the world in a luxurious cabin with butler service which costs around 500 k€. During his trip, he informed his tax office about these facts and requested an official evaluation whether this gift would be subject to tax. The tax office requested a gifts tax return which Guido submitted. He only declared an amount of 25 k€ which related to his partner’s share of costs for trips and boarding. However, the tax office assessed half of the total costs plus his payment for her taxes as income. Guido disagreed and sought legal recourse in court.  

Tax Court sees no Income

FG Hamburg did not agree with the tax office. Guido and his partner have a claim against the tour operator to have the ride. However, they were not accordingly enriched. Bettina was not able to freely dispose of this claim because the right was subject to the condition of accompanying Guido. “Accompanying” alone can only be understood as goodwill and no legal position. Her wealth was not increased. Guido or Bettina are subject to gifts taxation when they have an increase in their wealth. An increase in assets can also not be assumed because Guido waived reimbursement of her share because these expenses were luxurious costs which his friend would not have otherwise incurred. Not even the experience of the trip can be seen as income because Bettina accompanying Guido does not create a greater wealth.

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