The compensation payment agreed in the prenuptial agreement after the divorce is not subject to gift tax according to a decision by the Federal Fiscal Court (Az.: II ZR 40/19).
A prenuptial agreement gives spouses the freedom to regulate many financial matters. For example, the property regime of community of accrued gains can be excluded and separation of property can be agreed upon. Financial aspects can also be regulated prospectively in the event of divorce, such as excluding the payment of an equalization of accrued gains and instead agreeing on a one-time compensation payment. The Federal Fiscal Court decided in a ruling on September 1, 2021, that no gift tax is due for such need-based compensation, explains the law firm MTR Legal.
In the underlying case, the couple agreed on separation of property in the prenuptial agreement and stipulated a payment claim for the wife in the event of divorce. As a result, the wife no longer had a claim to ongoing alimony payments. 16 years later, the marriage was actually dissolved, and the husband paid the agreed contract to his ex-wife.
The tax office considered the payment to the wife as a gratuitous transfer and demanded gift tax. The Tax Court of Munich confirmed this view. The husband’s payment was made without any return service from the wife.
However, the Federal Fiscal Court saw it differently in the appeal proceedings and overturned the decision of the Tax Court and the gift tax assessment. The payment to the wife was a need-based compensation, according to the Federal Fiscal Court. This results from the fact that the couple had already stipulated extensive individual arrangements for divorce in the prenuptial agreement. The payment was meant to regulate the financial claims that would have been due to the wife in the event of divorce. Thus, it was not a gratuitous transfer, the Federal Fiscal Court made clear. Furthermore, the corresponding provisions in the prenuptial agreement clearly showed that the spouses did not intend to make a gift, but rather to protect the husband’s assets from unforeseeable consequences in the event of a divorce.
Through forward-looking arrangements in a prenuptial agreement or a postnuptial agreement, assets can be effectively protected and gift tax can be saved. Experienced attorneys in tax law provide advice.
