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Tis the Season…Give the Gift of…Money!

Volume XIX, Issue 48

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Tis the season for giving gifts, right? This is a good time to give gifts to loved ones, and for some, the desire to take advantage of this period to be generous. In order not to risk having these gifts reclassified by the French tax authorities as donations, the question of their amount immediately comes to mind.

Christmas packages wrapped and surrounded by various toys and decorations

A customary gift must be linked to a family event (Christmas, birthday, passing an exam, marriage, birth of a child, etc.) or not be disproportionate to the assets of the person offering the gift (income, standard of living, assets). There is no fixed amount that can be given—the amount must be assessed on a case by case basis.

For example, the judges of the Cour de Cassation (one of the four courts with jurisdiction over all civil and criminal matters) qualified, as a customary gift, a 20,000€ gift from a husband to his wife, made with the help of a loan, in order for her to buy a car, the gift having taken place on the occasion of her birthday and the monthly payment reimbursed by her husband representing “only” 20 percent of her net income. Thus, this amount varies from one person to another. What may seem modest for one person, may be disproportionate in another case.

The interest of these gifts is that they have no fiscal impact. They do not affect the legal deductions. There is no gift tax to pay and they cannot be added to the donor’s estate. There is a threshold below which the donation is not taxed. The amount depends on the relationship between the donor and the recipient.

The personal deductions are:

* 100,000€ if the donee is a child, a father or a mother
* 31,865€ if the donee is a grandchild
* 80,724€ if the donee is the donor’s spouse or his or her civil union partner
* 15,932€ if the donee is a living or represented brother or sister
* 7,967€ if the donee is a nephew or a niece
* 5,310€ if the donee is a great-grandchild

Table graphic showing the amounts for donations to various family memebers

An allowance of 159,325€ is available to any disabled donor under certain conditions. It is cumulative with the personal allowance. These allowances can be applied several times in a row if each donation made to the same person by the same donor is at least fifteen years apart from the previous one. It is also possible to make a donation of 31,865€ every fifteen years, in the form of money and in full ownership, to a child, a grandchild, a great-grandchild or, if the donor does not have one, a nephew or niece or by representation of a grand-nephew or grand-niece.

The donee (recipient) must be over 18 years of age. The donor (the one who gives) must be less than 80 years old. In the case of a gift of money, the personal deductions and the deduction provided for a gift of money can be added together.

For example, if a gift of money and a donation do not exceed the above-mentioned legal deductions:

* a father or mother under 80 years of age can give to a child over 18 years of age the sum of 131,865€ without paying any tax (i.e. 31,865€ + 100,000€)

* a grandfather or grandmother under 80 years of age can give to a grandchild over 18 years of age the sum of 63,730€ without paying duties (31,865€ + 31,865€)

* a great-grandfather or great-grandmother under 80 years of age can give to a great-grandchild over 18 years of age the sum of 37,175€ without paying duties (31,865€ + 5,310€)

* an aunt or uncle under 80 years of age can give to a niece or nephew over 18 years of age the sum of 39,832€ without paying duties (31,865€ + 7,967€)

(Source)

Sound complicated? It is. This is France where nothing is simple or straightforward!

The legal form for a French Acte de Donation

My advice to you is to work with a tax specialist to determine the best way to make these donations and reduce future inheritance taxes for your loving heirs. I’m in the midst of this myself…and getting the straight answers is not easy!

See our recommended resources for such advice here. https://adrianleeds.com/invest-in-france/financial-planning-for-expats/

Framed photo of Adrian Leeds surounded by holiday decorationsAdrian Leeds
The Adrian Leeds Group®

P.S. If you are considering a property purchase in France, don’t do it lightly. Let us help you make the smartest decisions to ensure you make the best investment you can, including the ramifications of French law on inheritance. Contact us to learn more.

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