Chain Gift (Kettenschenkung)

In the case of a chain gift, an item is given to the donee with the intention that the gift is passed on to a third party. The aim of the "detour" is to make use of higher tax allowances. 
Example: Father V wants to give his son EUR 800,000. Father V makes a gift of EUR 400,000 to his son free of gift tax using the general tax-free amount. He gives a further EUR 400,000 to his wife E on condition that the money is passed on to S. V believes that the gift to S via E is also tax-free, as the general tax-free amount is available again in the relationship between E and S. 

If the sole purpose of the chain gift is to bring about a tax advantage, this constitutes an abusive tax planning scheme. However, if there is no (legally enforcable) obligation to pass on the gift and the gift has already been made at the time of passing the gift on, there is no chain gift in this sense. See BFH II B 60/11.