Ex-partners wishing each other the best after divorce

The facts

The man and woman were married under the old system of community of property, and the man owned his own business. Upon divorce, the business was allocated to the man, and the woman was granted a claim against him for €1 million. In the divorce settlement, the woman renounced her claim against the man.

The tax authorities: making life less fun…

The tax inspector regarded the woman’s generosity as a gift and imposed a gift tax assessment on the man. The man disagreed and took the matter to court.

The court ruled that by waiving the claim, the man was enriched and the woman was impoverished. The man disputed that there had been any enrichment or that the woman intended to benefit him.

He argued that the woman’s intention was not to enrich him but to avoid endangering the financial health of the business.

The court sees it differently

The court rejected this argument. According to the court, what matters is that the woman was aware of the advantage to the man and that she intended to confer this benefit. The man continued to deny this, but the court did not believe that the woman would have renounced a €1 million claim for just any third party with a business.

The man further attempted to argue that the waiver should be exempt from gift tax because the woman felt a moral obligation to relinquish the claim – thus, there would be a “natural obligation”.

The court dismissed this argument as well. There was no pressing necessity for the woman to waive the debt, considering the financial status of the business. Therefore, she had no grounds to feel morally obligated.

In short: when favouring the other spouse during a divorce, it is essential to also consider the tax consequences.

More information

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