Joint bank accounts, used by thousands of families to manage their everyday finances, may be hiding tax traps for account holders. A simple transfer of funds from a joint account to a personal one — or to another account with multiple co-holders — can, under certain circumstances, be classified by tax authorities as an informal gift, potentially triggering a tax audit and resulting in additional tax liabilities.
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The issue came to light through a case reviewed by the Dispute Resolution Directorate (DED). The case involved the transfer of €240,000 from a joint family account — held by a father, mother, and their two children — to a new co-managed account maintained by the son and his wife.
The DED ruled that the transaction constituted an informal gift, as there was no evidence that the son had contributed to building the balance of the original account. Furthermore, following the transfer, the funds became exclusively available to him and his wife. On these grounds, the taxpayer’s appeal was rejected.
The ruling confirms that being a co-holder of a joint bank account does not automatically confer ownership over all the funds it contains. If it is established that a co-holder made no contributions to the account but subsequently used the funds for personal benefit, the transaction may be treated as a taxable gift.
When the tax authority considers a transfer a gift
Under the current regulatory framework, when a joint account co-holder who has not contributed to the account balance withdraws or transfers funds for personal use, that transaction may be classified as a gift and taxed accordingly.
In recent years, a significant number of cases involving monetary parental transfers and gifts have been brought before the DED, with taxpayers contesting taxes and fines imposed by the tax authorities. Many of these disputes involve parental transfers made in cash rather than through the banking system, as well as cases of successive money transfers that were deemed attempts to circumvent tax regulations.
Over 1,000 cases under scrutiny
According to the tax audit schedule, 1,080 cases related to monetary parental transfers and gifts are expected to be reviewed this year. Auditors are focusing primarily on cases where there are indications of abuse of the €800,000 tax-free threshold. Relevant declarations are submitted electronically through the myProperty platform, after which the Greek Independent Authority for Public Revenue (AADE) cross-references the data with information provided by banking institutions.
If the bank does not confirm the transaction and the taxpayer fails to submit the required supporting documents, the tax administration may impose tax without recognising the tax-free allowance. In such cases, tax is levied from the first euro, at rates of 10%, 20%, or 40%, depending on the degree of kinship between the parties involved.
Five key points to watch out for
1. Tax-free gifts up to €800,000
Monetary gifts and parental transfers of up to €800,000 to first-degree relatives (parents, children, spouses, grandparents, and grandchildren) are exempt from tax, provided they are made through the banking system and properly declared.
2. Cash transfers — no tax-free allowance
When a parental transfer is made in cash rather than through a bank transaction, a 10% tax applies with no tax-free exemption.
3. Transfers via IRIS instant payments
Sending small amounts from parents to children via instant payment systems such as IRIS — for pocket money or to cover everyday needs — is not considered a gift and does not require a declaration, particularly when the child is a dependent family member.
4. Successive money transfers
The tax authority scrutinises cases where funds are transferred successively between relatives, in order to determine whether an attempt is being made to exploit the tax-free allowance by individuals who are not entitled to it. Where such a practice is established, a 20% tax may be imposed with no tax-free threshold.
5. Transfers into joint accounts
Extra caution is required when funds end up in a joint account held by the recipient alongside a third party. Tax authorities can investigate who ultimately used the funds, and if it is found that the third party benefited, a gift tax may be assessed against them. Experience from recent years shows that money movements between relatives and joint account co-holders are coming under increasing scrutiny. For this reason, taxpayers are advised to maintain complete documentation of all transactions and to strictly follow the prescribed procedures, in order to avoid unwelcome tax surprises.
