Car Donation Contract: All You Need to Know

A car donation contract (Schenkungsvertrag Kfz) facilitates the gratuitous transfer of a vehicle to another person. While this process may seem straightforward at first glance, it involves several legal and tax aspects that must be considered to avoid future problems. In this article, you will learn everything you need to know about car donation contracts, from creation to tax implications.

What is a Car Donation Contract?

A car donation contract is a legally binding agreement that governs the donation of a motor vehicle. It documents the donor’s declaration of intent to transfer the vehicle free of charge and the recipient’s acceptance of this donation. From a legal perspective, this is a bilateral legal transaction. The contract protects both the donor and the recipient and ensures clarity regarding ownership. From a car mechanic’s point of view, the donation contract is also relevant as it provides information about the rightful owner, which can be important for repairs and maintenance work. Professor Otto Klein, an expert in automotive law at the University of Munich, emphasizes in his book “The Car Donation Contract in Detail”: “Clear regulation of ownership is essential to avoid later disputes.”

How to Create a Car Donation Contract

A car donation contract should contain specific information to be legally sound. This includes the full names and addresses of the donor and recipient, a detailed description of the vehicle (Vehicle Identification Number, make, model, mileage), date of donation, and the signatures of both parties. It is advisable to have the contract notarized to avoid future problems. Although notarization is not mandatory, it offers additional security and evidentiary value. For a car mechanic, the clear identification of the vehicle by the Vehicle Identification Number in the donation contract is important to ensure the correct spare parts and maintenance work.

Tax Implications of a Car Donation Contract

Donating a car can have tax implications for the recipient. Gift tax may be applicable, the amount of which depends on the value of the vehicle and the degree of kinship between the donor and recipient. Allowances can reduce or eliminate the tax burden. Inform yourself in good time about the applicable allowances and tax rates. For a car mechanic, the tax aspects are less relevant, but they can point out to their customers the importance of properly processing the donation contract to avoid later problems. “Consulting a tax advisor can be very helpful in this context,” recommends Dr. Anna Schmidt, a financial expert from Frankfurt, in her article “Donating and Taxes.”

Man and woman discussing car donation contract with a tax advisor

Frequently Asked Questions About Car Donation Contracts

Does a car donation contract need to be notarized? No, notarization is not mandatory, but it is recommended.
What costs are associated with a car donation contract? Costs arise from the creation of the contract (e.g., by a lawyer) and possibly from notarization.
What happens if the donor dies before the vehicle is handed over? In this case, the donation does not take effect.

Other Important Points About Car Donation Contracts

In addition to the points mentioned above, you should also think about car insurance. The recipient must insure the vehicle in their name immediately after the donation. The vehicle registration documents must also be changed accordingly. Do not forget to update the vehicle registration certificate (Fahrzeugbrief) and the vehicle registration document (Fahrzeugschein). These steps are important to ensure the lawful use of the vehicle. “Timely re-registration of the vehicle is essential to avoid fines,” explains car expert Hans Müller in his guide “Safe on the Road.”

Car Donation Contract vs. Car Purchase Agreement

In contrast to a car donation contract, a purchase price is agreed upon in a car purchase agreement. The transfer of ownership takes place against payment. Both types of contracts have different legal and tax implications.

Need Support?

Do you have questions about car donation contracts or need help creating one? Contact us! Our car law experts are happy to assist you. We offer comprehensive advice and support in all matters relating to car donation contracts. Visit our website autorepairaid.com for more information and contact us for a personal consultation. We will be happy to help you!