What Sending Money to Your Parents in India Actually Costs From Europe

My brother-in-law Karthik has been sending money to his parents in Chennai for eleven years. Every month, reliable as a paycheck. I asked him once what rate he gets. He said, "I don't know. I just do it through the bank. It's fine."

I ran the numbers on a napkin while he was talking. He looked at the paper for a while. Then he said, "That's a vacation."

Almost everyone who lives in Europe and has parents in India sends money home. Almost nobody has worked out what the sending costs, and fewer still have asked whether their country of residence sees that money as support or as a gift. The first question is arithmetic. The second one can come with a tax bill.

The Arithmetic

Take €800 a month. A bank transfer with a typical all-in cost of 3%, counting the fee and the exchange rate markup, costs €24 a month, or €288 a year. A specialist transfer service at around 0.6% all-in costs under €5 a month, about €58 a year. The difference is roughly €230 a year.

Over twenty years that is €4,600 in fees. If the €230 had been invested each year at an assumed 5%, it would be about €7,600. Double the monthly amount, which is not unusual for someone supporting parents and paying for a flat, and the figure doubles with it.

The Fee You See Is the Small One

Most people compare transfer fees. The larger cost is the exchange rate. A bank quotes you a rate below the market rate and keeps the difference, and that markup never appears as a line on the statement.

The check takes two minutes. The European Central Bank publishes a daily euro reference rate for the Indian rupee. Multiply what you send by that rate. That is what your parents would receive with zero cost. Subtract what they actually received, convert the gap back to euros, and add the visible fee. That is your real cost. If you have never done this for a bank transfer, assume it is somewhere between 2 and 4%.

Support or Gift? Your Country of Residence Decides

India does not tax your parents on money from you. Gifts from a relative are exempt for the person who receives them. That is the end of the question on the Indian side, and it is why most people assume there is no question at all.

Several European countries tax gifts made by their residents, and they draw a line between maintaining someone and giving them something.

• Germany exempts gifts made for someone's appropriate maintenance or education (§13(1) No. 12 ErbStG). Regular support for parents who need it sits there. A lump sum toward a flat does not. Gifts to parents fall in tax class II, with a €20,000 allowance per ten years.
• The Netherlands levies gift tax when the giver lives in the Netherlands, wherever the recipient lives. Support for parents who genuinely need it falls under the exemption for meeting a natural obligation (natuurlijke verbintenis), which Dutch practice recognises for children supporting parents in need. The need has to be real and you may have to show it. A one-off lump sum is a gift, and the annual exemption for gifts to anyone other than your children is a few thousand euros.
• Switzerland leaves gift tax to the cantons, and the treatment of gifts to parents varies from one canton to the next.

The general rule holds across all three: keep support and lump sums separate. Monthly money for living costs is the easy case. A large transfer for a renovation, a medical bill or a flat in your parents' name is a different transaction, and sending it through the same monthly route doesn't change what it is.

Karthik switched that week. He texted me after the first transfer: "First transfer went fine. It's fine." The same words he used about the bank. The difference is that this time he knew what it cost.