Encyclopedia of Solutions. Contract of gift of the car
Pursuant to Article 209 of the RF Civil Code the owner shall have the right to dispose of his/her property in any way not prohibited by law, including alienation of property to other persons (e.g. by gift).
Under the contract of donation one party (the donor) free of charge transfers or undertakes to transfer to the other party (the recipient) the thing in ownership (clause 1 of article 572 of the Civil Code).
Often when intending to conclude a sale or gift agreement for a car a power of attorney for the management and disposal of the vehicle (the so-called “general power of attorney”) is drawn up. However, by its legal effect, a power of attorney has nothing to do with these transactions, since no transfer of ownership of the vehicle takes place as a result of the execution of a power of attorney.
It is also necessary to distinguish the gratuitous transfer of a vehicle into ownership (donation) and the transfer of such property for gratuitous temporary use. In the latter case is not a gift, and the conclusion of an agreement of gratuitous use of a car (loan agreement), which suggests the existence of the lender counter obligations, above all, the obligation to return the property after a certain period (paragraph 1 of Art. 689 of the Civil Code, see also the definition of RF SAC of 11.12.2007 N 15673/07). If the car owner wishes to donate the car, the contract must contain an explicit expression of will for the transfer of the vehicle into the ownership of another person.
When making a car donation it is necessary to be guided by general norms regulating the procedure for concluding a donation agreement.
The requirements for the form of a gift contract are established by article 574 of the Civil Code of the Russian Federation. Thus, if a gift is accompanied by the transfer of a gift to the donor and the donor is a citizen (or a legal entity, but in this case the value of the gift must not exceed 3000 rubles, which seems unlikely when giving a car), the gift agreement may be concluded orally. For the transfer of a gift to the giver, it is sufficient to hand over the gift or title documents for the property, or to make a symbolic transfer (handing over the keys, etc.). However, it seems advisable in all cases to conclude a car contract in writing, since otherwise it will be quite difficult for the giver in a disputed situation to prove the very fact of the gift. In addition, the registration of the car in the name of the donor will be problematic, because it requires an agreement confirming the transfer of ownership of the vehicle (clause 15.5 of the Administrative Regulations. approved by Order of the Ministry of Internal Affairs of Russia from 07.08.2013 N 605).
The car donation agreement does not require state registration. Notarization of the donation agreement is also not required, but may be carried out at the wish of the parties. If the necessity of such verification is stipulated by the agreement of the parties (clause 2 of p. 2 of article 163, clause 1 of article 434 of the RF Civil Code), then before giving the contract the notarial form, in our opinion, it should be considered as not concluded (clause 2 of article 420, subparagraph two of clause 1 of article 434 of the RF Civil Code).
Ownership of the car arises from the moment of its transfer to the donor in execution of the contract of donation and does not depend on the registration in bodies of the traffic police, since such registration is not a way to establish the moment of ownership transfer, and the basis for the admission of the vehicle to participate in road traffic (clause 1 of Art. 223 of the Civil Code of Russia, see also the appeal definition of SK on civil cases of Sverdlovsk regional court from June 20, 2014 on the case N 33-7334/2014, cassation definition of SK on civil cases of the Moscow City Court on 08.02.2011 However, lack of registration entails the inability to operate a vehicle, because vehicles are allowed to road traffic in the Russian Federation only after their registration and issuance of appropriate documents (paragraph 3 of Art. 15 of the Federal Law of 10.12.1995 N 196-FZ “On Road Safety,” Decrees of the FAS North Caucasus region of 10.10.2007 N F08-6186/07-2471A, FAS Ural District of 29.09.2009 N F09-7317/09-S6).
The order of car registration is established by the Rules of registration of motor vehicles and trailers to them in the State Inspectorate of Road Safety of the Ministry of Internal Affairs of the Russian Federation (hereinafter – Regulations), approved by order of the Ministry of Internal Affairs from 24.11.2008 N 1001. Terms and sequence of administrative procedures (actions) of officials of Registration offices are stipulated by the above mentioned Administrative Regulations.
The donor is not obligated to have the vehicle registered (Clause 6 of the Rules, Clause 56.1 of the Administrative Regulations).
The order of registration of property transfer under the gift contract is not established by the rules of the Civil code of the Russian Federation. However, it should be borne in mind that from the moment of transfer of the right of ownership to the car to the new owner the risk of accidental destruction and accidental damage to the property passes (article 211 of the Civil Code). In addition, administrative liability for road traffic rules violation, fixed by means of automatic photo or video fixation, as a general rule is imposed on the owner of the vehicle (article 2.6.1 of the CAO RF). It should also be noted that if the giver has no documentary evidence of the actual transfer of the vehicle, it will be difficult for him to prove that he is the owner of this vehicle, which may entail negative consequences for the giver, for example, the impossibility to recognize his ownership of the property or seize the vehicle from illegal possession (see appellate decisions of Moscow City Court from 26.06.2015 N 33-11976/15, IC on civil cases of Chelyabinsk regional court from 21.08.2014 n. Therefore, it is advisable to formalize the transfer of a car to a new owner by a deed of transfer and acceptance or another similar document, with the help of which it will be possible to determine the moment of car transfer and, accordingly, the moment of occurrence of ownership right to this property by its acquirer. The form of the act is not stipulated by the current legislation; it can be drafted in any form.
Please note: at the moment of right of ownership of the vehicle, including its purchase, the owner is obliged to insure his/her civil liability before registration of the vehicle, but not later than 10 days after the right of ownership arises (clause 2 article 4 of the Federal law dated 25.04.2002 N 40-FZ “On compulsory civil liability insurance of vehicle owners”). Compulsory civil liability insurance of vehicle owners is carried out in accordance with the Rules established by the Bank of Russia Regulation N 431-P of 19.09.2014.
It should also be noted that in a number of cases the law prohibits or restricts donation (Articles 575, 576 of the Civil Code of the Russian Federation). In particular, donation (with the exception of ordinary gifts, the value of which does not exceed 3,000 rubles) is inadmissible in relations between commercial organizations (subparagraph 4 of paragraph 1 of Article 575 of the Civil Code). Therefore, a contract aimed at gratuitous car donation, where both the donor and the donated under such a contract is a commercial organization (clauses 1 and 2 of Art. 50 of the Civil Code), violates the law and, consequently, is invalid (Art. 168 CC RF, Resolution of the FAS Ural district of 09.11.2012 N F09-11413/12, FAS Central District from 15.10.2004 N A48-158/04-12).
Car gift agreement (donation agreement)
Currently, there are several ways of transferring ownership of a car. More often than not, car owners sell a vehicle using a car purchase agreement.
But this option is not always the most profitable, because the car owner has to pay a corresponding tax when selling the car.
In practice, however, there are situations in which you can completely avoid paying tax if you use a donation agreement or a deed of gift. We are talking about the operation of donation of a vehicle, which will be considered within the framework of the article.
Payment of taxes when donating a car in 2022
To begin with, I would like to note that only a gift of a car concluded between close relatives is not taxable . This follows from Part 2 of the Tax Code of the Russian Federation (Article 217 paragraph 18):
Income received as a gift is exempt from taxation if the donor and the giver are family members and (or) close relatives in accordance with the Family Code of the Russian Federation (spouses, parents and children, including adoptive parents and adopted children, grandparents and grandchildren, full and half-siblings (having a common father or mother) brothers and sisters);
Thus, the gift of a car is not taxable if the parties to the transaction are:
- husband – wife;
- father (mother) – son (daughter);
- the adopter – the adopted;
- grandfather (grandmother) – granddaughter (grandson);
- brother (sister) – sister (brother) (having at least one parent in common).
Pay attention that in all other cases of donation of a car the donor is obliged to pay the tax at the rate of 13 percent of the value of the car.
For example, if you donate a car worth 500,000 rubles, the tax will be 65,000 rubles.
Note. When receiving the car as a gift tax deductions are not provided (part 2 of Article 220 of the Tax Code of the Russian Federation), i.e. the tax will have to be paid from the entire value of the gifted car.
Donation of a car between distant relatives
In practice, there are situations where it is necessary to transfer a car between people who are actually relatives, but who are not on the list of close relatives.
For example, a few common situations:
- mother-in-law (father-in-law) – daughter-in-law;
- mother-in-law (father-in-law) – son-in-law;
- ex-wife – ex-husband;
- common-law wife – common-law husband.
In this case, there are several options for registration of the transaction with minimal costs:
- Using a purchase and sale agreement.
- Using several gift contracts through intermediate close relatives.
For example, let it be necessary to gift a car from the mother-in-law to the son-in-law. In this case, the mother-in-law first gives the car to her daughter (a close relative). The daughter then gives the car to her husband (also a close relative).
In this case, you will have to:
- Draw up 2 contracts of gift.
- 1 time to go to the traffic police for registration of the car.
Tax return for car donation
The donor must file a tax return only if he received the car as a gift Not from a close relative. This follows from Article 228 of the Russian Tax Code:
1. The following categories of taxpayers shall calculate and pay tax in accordance with this Article: . 7) individuals receiving income in cash and in kind from individuals who are not individual entrepreneurs in the form of a gift, With the exception of cases provided for in paragraph 18.1 of Article 217 of this Code, when such income is not subject to taxation;
So when a car is donated to a close relative there is no need to file a tax return.
Obviously, the car donation transaction makes sense only when it is made between close relatives. In all other cases I recommend using the sale-purchase scheme.
Let me remind you that in case of sale-purchase, the seller will pay the tax, but the amount of tax can be significantly lower than in case of donation, since you can use the tax deduction. Well, and when owning a car for more than 3 years, no tax is paid at all.
Car donation agreement form between relatives
Let’s proceed directly to the execution of the car donation agreement . The form of the deed of gift in the form of images (click to enlarge):
You can also download the car donation agreement form as a pdf file here.