A single mistake in a bank transfer can turn a tax-free gift between parent and child into a taxable donation, subject to 10% duty from the very first euro. A cash deposit instead of a bank transfer, a joint account used incorrectly, or an inability to prove who the real donor was, can be enough to lose the 800,000-euro tax-free allowance and trigger a tax investigation.

Greece’s tax authorities no longer look solely at whether a declaration was filed or whether the money passed through a bank account. Inspectors now examine who actually held the funds, whether that person had the financial means to give them, who gave the instruction for the transfer, and who the real donor was, even if a different person’s name appears on the declaration.

The real story

A recent ruling by Greece’s Dispute Resolution Directorate (DED), the body that hears appeals against tax authority decisions, shows how complicated this can become in practice. The case concerned a gift of 26,000 euros declared as a transfer from a daughter to her father. At first glance, it looked like a straightforward parental gift between first-degree relatives, covered by the 800,000-euro tax-free allowance. A tax audit, however, told a different story.

The daughter named as the donor had no income or financial means that could account for a transfer of that size. Her husband, by contrast, had income to match, had received a tax refund almost equal to the amount of the gift, and was the person who had actually instructed the transfer from the couple’s joint bank account. On the basis of this evidence, the Independent Authority for Public Revenue (IAPR), Greece’s tax agency, concluded that the real donor was not the daughter but her husband.

That finding completely changed how the transaction was taxed. The gift was no longer treated as a transfer between first-degree relatives, but reclassified as a donation from a son-in-law to his father-in-law, a relationship taxed at 20%. The consequences were costly: the 26,000-euro transfer attracted 5,200 euros in tax, plus a 2,600-euro penalty for an inaccurate declaration.