The sale price can be funded through wood trade income, and the estate’s property value is transferred to the buyer tax-free. The transferor does not incur any disposal gain tax. If the parents accrue additional wealth over the years, they can give gifts tax-free up to EUR 4,999 every three years (from the same calendar day).
Calculation for tax return for forestry operations
An inheritor can deduct some of the acquisition cost of the forest estate in their income taxation as a tax return for forestry operations.
| TAX RETURNS FOR FORESTRY OPERATIONS ARE DETERMINED AS FOLLOWS: | |
| Estate sale price | EUR 200,000 |
| Transfer tax 4% | EUR +8,000 |
| Acquisition cost | = EUR 208,000 |
The tax return for forestry operations is 60% of acquisition cost, which comes to EUR 124,800.
The inheritor saves 30% of the EUR 124,800 in wood trade income taxes.*
| Tax benefit 30% of EUR 124,800. | EUR 37,440 |
| Paid transfer tax 4% | EUR -8,000 |
| Net benefit from tax return for forestry operations | EUR = 29,440 |
*The example calculation assumes a 30% capital gains tax. Capital gains tax is 30% until EUR 30,000, and 34% for the exceeding amount.
If the example case’s sale price of EUR 200,000 is returned to the inheritor as an inheritance or gift, the total tax benefit is still positive.
| OPTION 1: INHERITANCE | |
| Inheritance tax (tax bracket I, one decedent) | EUR - 21,700 |
| Net benefit from tax return for forestry operations | EUR 29,440 |
| Tax benefit | EUR 7,740 |
| OPTION 2: TRANSFEROR GIFTS THE SALE PRICE OF EUR 200,000 BACK TO THE INHERITOR | |
| Gift tax (tax bracket I, one person giving the gift) | EUR 22,100 |
| Net benefit from tax return for forestry operations | EUR 29,440 |
| Tax benefit | EUR 7,340 |