Gift Tax on Foreign Individuals Gifting Assets to Taiwanese Residents

Applicability of Gift Tax Exemption and the Alternative Minimum Tax (AMT)

A. Foreign individuals gifting property located in Taiwan to Taiwan residents

Under the Estate and Gift Tax Act, the annual gift tax exemption applies to all donors, regardless of nationality. A foreign individual who gifts property located in Taiwan to a Taiwanese resident is also entitled to deduct the annual exemption of NT$2.44 million from the total gift amount.

Example: Peter, who is a Taiwanese, receives a gift from his British father, David. On June 30, 2024, David transfers NT$5,000,000 from his bank account in Taiwan to Peter. Since David made no other gifts during the year, the taxable gift amount is NT$2,560,000. (NT$5,000,000 – NT$2,440,000 exemption). At the 10% tax rate, the payable gift tax is NT$256,000.

Please note that the gift tax applies not only to Taiwanese nationals but also to any Taiwan tax resident who receives such gifts.

B. Foreign individuals gifting property located outside Taiwan to Taiwan residents

According to Article 3 of the Estate and Gift Tax Act:

• If the donor is a Taiwanese national, both domestic and overseas gifted property is subject to gift tax.

• If the donor is a non-resident Taiwanese national or a non-Taiwanese national, only gifts of property located in Taiwan are subject to gift tax.

Therefore, if a foreign individual gifts overseas assets (e.g., funds in an overseas bank account) to a Taiwanese resident, such a transfer does not fall within the scope of Taiwan’s gift tax.

However, under the Income Basic Tax Act (Alternative Minimum Tax, AMT), the recipient must include the value of overseas gifts in their basic income calculation if they are a resident of Taiwan. Specifically, Article 12, Paragraph 1, Subparagraph 1 requires that gifts of overseas assets be included in the individual’s basic income. If the recipient’s total overseas income for the year does not exceed NT$1,000,000, it may be excluded.

Example: John, a U.S. citizen, gifts his nephew Michael (a Taiwanese tax resident) US$50,000 (approximately NT$1,600,000) from his Citibank account in the United States in 2024. Since John is a foreigner gifting overseas property, the transaction is not subject to Taiwan gift tax. Nevertheless, because Michael received more than NT$1,000,000 in overseas assets, he must report the NT$1,600,000 as part of his basic income when filing his 2024 individual income tax return, and it will be subject to Taiwan’s AMT rules.

It is important to note that this rule applies to any Taiwan tax resident recipient, regardless of nationality. If a Taiwan tax resident receives gifts of overseas property from a foreign individual, the value must be included in their basic income for AMT purposes.

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Introduction of the Basic Tax (Alternative Minimum Tax, AMT) in Taiwan (2025 Update)

In Taiwan, the Income Basic Tax Act (commonly known as the Alternative Minimum Tax, AMT) ensures that individuals pay a minimum level of tax, even if deductions or exemptions significantly reduce their regular income tax liability.

Key Rules for Individuals

1. NT$1,000,000 reporting threshold

   • Overseas income, including gifts of overseas assets, must be included in the basic income calculation if the total exceeds NT$1,000,000 in a tax year.

   • If the total overseas income is NT$1,000,000 or less, it is excluded.

2. NT$7,400,000 basic exemption (2025)

   • When calculating AMT, individuals may deduct a basic exemption of NT$7.4 million from their basic income.

   • Only the portion of basic income exceeding NT$7.4 million is subject to AMT.

Example

Michael, a Taiwan tax resident, receives US$50,000 (about NT$1,600,000) in 2024 from his uncle John’s U.S. bank account as a gift.

• Since the gift is overseas property given by a foreign individual, it is not subject to Taiwan gift tax.

• Because NT$1,600,000 exceeds the NT$1,000,000 reporting threshold, the amount must be included in Michael’s basic income.

• However, if Michael has no other income that qualifies as basic income, his total basic income would be NT$1,600,000, which is still well below the NT$7,400,000 basic exemption. Therefore, Michael is not required to pay AMT in this case.