This is the amount you can gift to children and grandchildren every week without risking anything

Weekly Allowance for Children: Financial and Fiscal Implications

Is the weekly allowance given to children or grandchildren subject to scrutiny by the Tax Authorities and can it lead to an investigation or other risks? Are there amounts that cannot, by law, be exceeded in gifts to children? Nearly every parent has dealt with the weekly allowance for their children, a way to make kids and teenagers more financially independent that also has clear pedagogical value.

A study conducted by one of the major banking groups on the allowance has revealed that those who received small sums of money weekly as children are much better at managing their finances in the long run as adults.

The Evolution of Children’s Allowances

With the advent of new technologies, the concept of children’s allowances has evolved from cash to digital forms.
From Satispay to reloadable cards for minors, and eventually, after turning 18, to having their own bank account where parents transfer weekly sums that the young person manages independently.

However, the shift to digital has made children’s allowances traceable by the Tax Authorities.
Does this expose them to the risk of tax audits?

Is There a Limit to the Amount of Children’s Allowances?

As children grow, their needs increase, and consequently, the weekly allowance that parents provide also grows.
It is important to be mindful of the total sum transferred throughout the year, as it could amount to a significant figure, leading beyond the realm of mere gift giving.

What risks does a very high allowance pose? With digital transactions, particularly bank transfers, becoming the preferred method among youngsters, it is important to exercise caution.

Unlike cash transactions, there is no legal limit imposed on bank transfers between relatives.
A parent could gift their child tens of thousands of euros without breaking the law.
However, justifying the source of such a sum might become necessary down the line.

Practical Tips and Risks to Consider

It is advisable to provide a clear purpose for each bank transfer, especially as substantial amounts accrue over time.
While recurrent transfers over the years can be demonstrated, attaching the appropriate reason for each transaction is recommended.

If the annual donation surpasses a certain threshold, it may require a public donation deed.
Ensuring that the yearly donations stay within a “modest value” is crucial to avoid legal complications in the future.

In conclusion, when transferring the weekly allowance to children via bank transfer, it is essential to be mindful of the implications.
The traceable nature of these transactions means they are known to the Tax Authorities, and habitual donations could have unforeseen consequences, even affecting inheritance matters.