IRIS transfers: When pocket money can trigger tax and what the limits are
The clarification is particularly relevant to everyday small-value transfers between family members, including money sent by parents to students to cover rent, tuition, groceries and other daily expenses.
Everyday family transfers generally not subject to tax
According to the Greek tax authorities, routine transfers of small amounts for genuine family expenses do not in themselves create a tax issue.
For example, parents can use IRIS to transfer money to their children studying away from home to help cover accommodation, education, supermarket purchases and other ordinary living expenses.
In such cases, there is no overall monetary threshold for the transfers, provided that each individual transaction does not exceed €1,000 per day under the applicable IRIS transfer limit.
The key factor is the actual nature and purpose of the transaction, rather than simply the fact that money has been transferred between two individuals.
When can an IRIS transfer raise tax concerns?
Problems with the tax authorities may arise when users incorrectly describe the purpose of a transaction.
For example, a transfer that is actually intended to cover everyday expenses could potentially create confusion if its payment description incorrectly states that it is a “gift” or “loan.”
In such circumstances, the transaction could theoretically be treated under the tax rules applicable to monetary gifts or loans rather than as ordinary family support for daily expenses.
This distinction is important because a genuine monetary parental gift or donation is treated differently for tax purposes from ordinary pocket money or transfers intended to cover everyday family expenses.
Pocket money is different from a monetary gift
The Greek tax authorities emphasize that pocket money and a formal monetary parental gift or donation are separate categories.
Parents regularly transferring money to their children for living expenses does not automatically constitute a taxable gift. However, transactions that are genuinely gifts must be treated according to the applicable gift-tax rules.
Incorrectly labeling ordinary transfers can therefore create unnecessary questions or complications when transactions are examined by the tax authorities.
What IRIS users should keep in mind
The main issue is not simply how much money is transferred through IRIS, but why the money is being transferred and how the transaction is described.
Users should therefore make sure that the payment description accurately reflects the real purpose of the transfer. This can help distinguish ordinary family expenses from transactions that fall under separate tax provisions.
According to the clarification cited by Greek media, the potential tax treatment of a transaction can become significantly different when it is considered a monetary gift or another taxable transfer. In such cases, separate taxation rules may apply, with the source noting that the tax burden can theoretically reach 40% in certain circumstances.
