How to Safeguard Cash Donations to Children: Understanding the Cash Limit 2024

Avoiding Risks in Money Donations to Children with the Cash Limit set at 5,000 euros

Since January 1, 2023, the cash usage limit has been set at 5,000 euros.
This threshold has not changed this year, and cash transfers cannot exceed 4,999 euros.
What does this mean for donations to children? It is crucial information for parents who want to gift money to their children, as the limit also applies to daily situations, such as giving cash to their children.

The risk for those who violate the rules is twofold: attracting the attention of the Tax Authorities and facing hefty fines.

Donating Money to Children and Cash Limit

Currently, the limit for cash payments is 5,000 euros.
Practically speaking, all transactions above this threshold must be traceable.

This limit applies not only to general purchases or paying fees to professionals but also to donations to children (or any other family member/friend).

Therefore, when parents decide to financially help a child or simply give them a gift, if the donation amount exceeds 4,999.99 euros, it is advisable to choose a traceable payment method.

Risks of Exceeding the New Cash Limit in Donating to Children

Risks exist for those who surpass cash payments or donations of over 4,999.99 euros.
In case of a gift to children, the consequences would also affect the offspring.

If that money is used for a purchase by an individual with low income (or no income), the Tax Authorities may request explanations.
The only way to avoid a sanction (ranging from 3,000 to 15,000 euros) would be to prove the origin of that payment, a gift from a family member.
Unlike a bank transfer, proving a cash gift received is not as straightforward.
In the case of cash gifts, there is no documentary evidence to exhibit to support what is claimed.

The Tax Authorities could proceed with further tax assessments.
It would be better, if gifting a sum of money to children exceeding 4,999 euros, to opt for a bank transfer.
Although it is true that the Tax Authorities may not notice a cash gift exceeding the transfer limit to a child, it is essential to remember that if you give money to your children, it is for them to use for purchases.
Restricting children from spending cash out of fear of a tax assessment may not be a wise choice.

Finally, it is important to note that the cash limit has no consequences on the amounts that can be withdrawn or deposited into your account.