A paper donation (also referred to as a “donation by acknowledgement of debt”) is a gift, commonly from parents to children or grandchildren, in which the gifted amount is not transferred immediately. Instead, the amount is recorded as a debt owed by the donor to the recipient. This creates a receivable for the (grand)child against the parents. The receivable becomes payable only upon the donor’s death [1].
With a paper donation, you can make use of the annual gift tax exemptions and the lower gift tax rate (e.g. 10% between parent and child). In addition, a paper donation can reduce future inheritance tax, because the wealth is not received all at once as an inheritance. This may help avoid the higher inheritance tax rate of 20% between parent and child. Furthermore, the donor must pay 6% annual interest on the debt to the recipient. Both the nominal debt and the annual interest reduce the donor’s future estate, potentially lowering inheritance tax.
A paper donation only reduces the taxable estate if:
• The donation is recorded in a notarial deed [2]; and
• The donor actually pays 6% interest on the principal to the recipient every year (adding the interest to the debt is not permitted).
This form of wealth transfer is most commonly used by affluent individuals with partially illiquid assets, such as real estate or business assets.
"}},{"componentType":"sectionTitle","title":"What does the government want to change?"},{"componentType":"paragraph","richBody":{"value":"The State Secretary has announced that the principles for valuing paper donations for tax purposes need to be modernised. The evaluation will consider current interest rate levels and life expectancy, because the current deemed interest rate of 6% has not been updated since 1980. The target date for the new rules is 1 January 2028 [3]. The intention is to lower the deemed interest rate from 6% to 3% by 2028 [4]. This would reduce the tax advantage for both gift and inheritance tax.
The Spring Memorandum also proposes two additional measures. First, the adjustment of the deemed interest rate, as outlined above. Second, upon the donor’s death, the outstanding debt would be fully included for inheritance tax purposes. In other words: the paper debt would be ignored when determining the taxable estate. Previously paid gift tax may be credited.
A similar approach is proposed if the donor repays the outstanding debt during their lifetime. Such repayment would be treated as a new gift at once, potentially triggering gift tax under the applicable rates at that time.
"}},{"componentType":"sectionTitle","title":"Why does the tax benefit decrease if the deemed interest rate is adjusted?"},{"componentType":"paragraph","richBody":{"value":"The mandatory 6% interest payment creates a tax‑free transfer of wealth (for gift and inheritance tax purposes). If the deemed interest rate is lowered from 6% to 3%, this benefit becomes smaller.
Additionally, the new measure proposed in the Spring Memorandum removes the possible advantage from spreading wealth transfers over multiple years. Paper donations allow for staggered gifting, using annual exemptions and the lower tax bracket, often more favourable than being taxed on one large inheritance. Under the new proposal, that advantage would disappear.
"}},{"componentType":"sectionTitle","title":"What does this mean for you?"},{"componentType":"paragraph","richBody":{"value":"These announced (potential) changes may make paper donations less attractive in the future, or even eliminate any benefit entirely. Although the State Secretary has mentioned the desirability of transitional provisions for existing cases, paper donations are not explicitly included [5]. The Spring Memorandum also does not mention any transitional rules. Given these developments, it may be wise to take action.
For example, assess whether existing paper donations, or alternative gifting structures, still align with your situation if the new rules come into effect. Discuss this timely with your tax adviser or notary so that you can make a well‑considered decision.
"}},{"accordionList":[{"richBody":{"value":"
The information provided by ING in this article is not an offer, advice, or financial service and is intended solely to inform and provide practical tips. We recommend consulting a specialist for your financial and/or wealth planning. While this article has been compiled with the utmost care, inaccuracies or omissions may occur. ING is not liable for any damage (of any kind) resulting from the use of the information provided. No rights can be derived from this information. Any rates mentioned are indicative and not binding for ING. All rights and changes reserved. This is a publication of ING Bank N.V., registered in Amsterdam.
"},"title":"Written as of 30 March 2026"}],"componentType":"accordion"},{"accordionList":[{"richBody":{"value":"[1] The donor (borrower) does have the option to repay the debt in whole or in part during their lifetime. In that case, it is solely a repayment of a debt. It does not constitute a new gift.
[2] A defect in form, such as the absence of notarial authentication, can still be remedied at a later stage. If an informal (private) deed was drawn up in the past, it can subsequently be recorded in a notarial deed. After that, it will be treated as a debt when calculating the estate.
[3] A legislative proposal still needs to be drafted and approved by both the House of Representatives and the Senate.
[4] The modernised discount rate as of 1 January 2028 is estimated at 3% based on current interest rate expectations. This percentage is derived from CPB projections for long-term interest rates in the euro area.
[5] Transitional provisions are explicitly included for the discount rate applicable to equalization claims and debts. The existing discount rate will continue to apply if the first death occurred before the 6% rate was amended.
"},"title":"Footnotes"}],"componentType":"accordion"},{"componentType":"sectionTitle","title":"Read more"},{"cards":[{"body":"Find out why gifting a home in 2026 could offer a tax advantage, and what to consider.","cardSize":"medium","cardType":"article","componentType":"articleCard","date":"2026-03-03","image":{"extension":"jpg","original":"https://assets.ing.com/m/4da95090526e646c/original/Private-Banking-A-happy-senior-man-playfully-hugs-and-rubs-a-man-his-head-on-the-beach.jpg","transformBaseUrl":"https://assets.ing.com/transform/8eb5d362-1b16-40e7-84fb-0f039c870414/Private-Banking-A-happy-senior-man-playfully-hugs-and-rubs-a-man-his-head-on-the-beach","type":"image","width":3960},"link":{"url":"/en/private-banking/knowledge-and-insights/wealth-planning/gifting-home-child"},"title":"Gifting a home to your child? Pay close attention to timing"},{"body":"If it is up to the House of Representatives, tax will be levied on actual returns from 2028. Read more.","cardSize":"medium","cardType":"article","componentType":"articleCard","date":"2026-02-19","image":{"extension":"png","original":"https://assets.ing.com/m/4a3a415b93557f60/original/Man-looking-screen-desk-glasses.png","transformBaseUrl":"https://assets.ing.com/transform/597c4ea5-32c8-4ee4-a57f-7482e72a41c5/Man-looking-screen-desk-glasses","type":"image","width":814},"link":{"url":"/en/private-banking/knowledge-and-insights/wealth-planning/bill-on-actual-returns-taxation-on-real-investment-returns-from-2028"},"title":"Bill proposal: taxation on actual returns from 2028?"}],"componentType":"cards"},{"componentStyle":"default","componentType":"linkList","iconTitle":{"title":"Related"},"textLinks":[{"text":"Investing","url":"/en/private-banking/investing"},{"text":"Wealth planning","url":"/en/private-banking/wealth-planning"},{"text":"Our approach","url":"/en/private-banking/our-approach"},{"text":"Private Markets","url":"/en/private-banking/investing/private-markets"}]}]},"hasMacro":false,"id":"c2580923-922a-4b6b-9817-e452c51a9ceb","localeString":"en-GB","mainHeaderZone":{"authorInfo":{"authorName":"Stef Goossens","image":{"extension":"png","original":"https://assets.ing.com/asset/d703fd55-c1fd-45e9-ade8-79af9bc411cb/Stef-Goossens.png","transformBaseUrl":"https://assets.ing.com/transform/d703fd55-c1fd-45e9-ade8-79af9bc411cb/Stef-Goossens","type":"image","width":6600},"jobTitle":"Tax Expertise Manager"},"backLink":{"textLink":{"text":"Wealth planning","url":"/en/private-banking/knowledge-and-insights/wealth-planning"}},"componentType":"editorialHeader","coreHeader":{"body":"On 27 March, the Spring Memorandum stated that the government is examining measures to reduce the attractiveness of paper donations. Earlier, on 12 January 2026, the State Secretary for Finance had already announced in a Parliamentary Letter that Ministry officials are working on modernising, among other things, the interest rates used in gift and inheritance tax. A key component of this work concerns the fiscal treatment of paper donations.","headerImage":{"extension":"jpg","original":"https://assets.ing.com/asset/60c3c7fe-06ea-4ec0-ab69-ea97284a4962/Large_Web-and-Screen-Siblings-play-on-phone-in-back-seats-of-car.jpg","transformBaseUrl":"https://assets.ing.com/transform/60c3c7fe-06ea-4ec0-ab69-ea97284a4962/Large_Web-and-Screen-Siblings-play-on-phone-in-back-seats-of-car","type":"image","width":1920},"title":"Paper donation: recent developments and what they may mean for you"},"date":"2026-04-01","readingTime":3},"publishDate":"2026-04-02T11:20:22.502+02:00"}}