French Gift Tax

Gift Tax Rules: UK vs. France

In the UK, there is a 7-year survival period on gifts with no limit. The tax starts at 40% on day one and reduces each year, reaching 0% after 7 years. If the donor survives 7 years after the gift, it does not form part of the Estate.

As a French tax resident, the gift tax depends on your relationship with the recipient and the allowances available, which are only for family members. The donor must be under 80, and the beneficiary must be over 18.

• A gift made every 15 years is free of gift tax, provided it does not exceed the exemption limits.
• Gifts made within the 15-year survivorship period may later become taxable on the death of the donor, as explained below.

Gift Tax Exemption Limits

The tax-free gift limits depend on the relationship between the donor and the recipient, and in some cases, the donor’s age.

2018 Gift Tax Thresholds:

• Spouses/Partners: €80,724 between spouses or civil partners.
• Children: €100,000 from each parent to each child (or child to parent).
• Grandchildren: €31,865 from each grandparent to each grandchild.
• Brothers/Sisters: €15,932 to brothers and sisters.
• Nieces/Nephews: €7,967 to nieces and nephews.

In addition to these allowances, family gifts in cash (dons familiaux de sommes d’argent) of up to €31,865 can be made to each child, grandchild, or great-grandchild from each ascendant. If there are no descendants, the gift can be made to a niece or nephew, free of gift tax.

• This separate allowance is conditional on the donor being less than 80 years old and the beneficiary over 18 years old.
• These allowances are cumulative. For instance, a child may receive gifts from both parents and grandparents without affecting the exemption limits of the other.

Example:

Parents aged 70 can gift their two children a sum of €163,730 each, using the family cash gift allowance in addition to the general allowance, granting full exemption. The children can also receive the family gifts allowance from their grandparents or great-grandparents.

Survivorship Period

Even though you can make a gift free of tax every 15 years, if the donor dies before the 15-year period expires, the gift is added to the total value of the estate for the calculation of inheritance tax. This process is called the rapport fiscal.

• The 15-year period must expire to avoid taxation.
• Once the 15-year period has expired, the allowances are cumulative with inheritance tax allowances.

Inheritance Tax Allowances

The child allowances for inheritance tax are the same as those for gift tax. Accordingly, each child benefits from an inheritance tax allowance of €100,000 on the death of one parent, in addition to any expired sums previously granted by way of gift.

• For example, a gift to a child of €100,000 can be added to an inheritance tax allowance of the same amount.

Contact Information

The information provided here is intended as an introduction only and does not constitute advice. Beacon Global Wealth Management accepts no responsibility for losses incurred by acting on this information.

For personalized advice, contact:
Paul Flintham | International Financial Adviser | Beacon Global Wealth Management, France
Mobile: +33 6 24 96 27 51
Landline: +33 5 46 06 51 90
Email: paul@bgwealthmanagement.net

Beacon Global Wealth Management
Central Administration Office, 250 High Street, Guildford GU1 3JG, United Kingdom
Tel: +44 333 241 6966
Email: enquiries@bgwealthmanagement.net
Website: https://beaconglobalwealth.com