Gifts and Taxes: How to Avoid Unexpected Liabilities When Transferring Assets

Gifting property appears straightforward but can create serious tax consequences. Russian tax law differentiates treatment based on familial relationships: spouses, parents, children, and siblings are exempt from income tax on gifts, while unrelated recipients must pay income tax on the fair market value of the gift at rates up to 35%.

High-net-worth clients should be aware of valuation risks, proper documentation requirements, and cross-border implications. Undervaluing assets often triggers tax authority scrutiny, resulting in reassessments, penalties, and interest.