Greece announced a new initiative to tax wedding gifts, such as glass and plate sets, picture frames and cookware as part of efforts to boost the finance ministry’s revenue.
All items offered in the wedding lists of department stores or cash placed in the groom’s jacket or the bride’s bag offered as gifts to help newlyweds set up their new home, will be now be taxed.
Cash gifts are popular at Greek weddings and sometimes come in the form of envelopes presented during the reception or as part of cultural rituals, such as the “money dance.” Gift-giving is quite significant for newlyweds in Greece, rooted deeply in cultural traditions that emphasize family, community, and generosity.
Depending on the degree of kinship of the gift-giver, the new tax can reach up to 40 percent.
How is the tax on wedding gifts calculated?
Gift tax is calculated based on the amount of the gift and the donor-couple relationship. Taxation depends on the donor’s kinship category. There are a total of three categories of relatives that determine the applicable tax rate.
Class A includes first-degree relatives, such as parents and children, while Class B includes second-degree relatives, such as siblings and cousins. The third category includes all other relatives, with an increased tax rate.
Category A: First-degree relatives, i.e. parents, children, in-laws and grandchildren. Tax rate 10 percent.
Category B: Second-degree relatives, great-grandchildren, grandparents, half-siblings and cousins. Tax rate 20 percent.
Category C: All other relatives, except those belonging to the previous two categories. Tax rate 40 percent.
If, for example, a distant relative gives 5,000 euros, then the tax on the donation will reach almost half, i.e. 2,000 euros (5,000 x 40%).
What’s next? Taxing Christmas carols?
Critics say that the new tax is unlikely to work. Guests may try to avoid taxes by giving gifts informally, outside the formal wedding setting, to keep them under the radar. Also, if guests know their gifts will be taxed, they may reduce the amount they give, leading to a smaller total value of gifts received by the couple.
A commentator mocked the government’s initiative, asking what else the ministers might come up with next. Perhaps they’ll even consider taxing the young children who sing traditional Christmas carols in the streets.
Tax burden in Greece rises according to OECD
The conservative government of Kyriakos Mitsotakis has been elected twice on a pledge to reduce taxation for Greek citizens. However, statistics from the OECD show the tax wedge (tax and contribution burden) rising.
In 2023 a single worker in Greece earning the median wage, had a tax burden of 38.5 percent, marking an increase of 0.44 percentage points in relation to 2022.
For a couple with two children, the burden stood at 37.5 percent, up by 0.59 percentage points, compared to 2022.
For the single-earner couple, the burden increased by 0.73 percentage points and amounted to 37.1 percent.