In the UK there is a 7-year survival period on gifts (with no limit), the tax starts at 40% on day one, then reduces each year to 0% after 7 years. If you have survived as the donor for 7 years after the gift, it doesn’t form part of your Estate.
While you are a French tax resident, it depends on your relationship with and to whom you are gifting, the gift free allowances (which are below) vary and are only for family members. You have to be under 80 and the beneficiary over 18.
A gift made every 15 years is free of gifts tax, provided it does not exceed the exemption limits.
However, up to 15 years the gift may later become taxable on the death of the donor, as set in the survivorship period below
The limits on the amount that can be gifted free of tax depends on the relationship between the parties and, in some cases, on the age of the donor.
The thresholds operational in 2018 are as follows:
- Spouses/Partners – €80,724 between spouses and those in civil partnership.
- Children – €100,000 from each parent to each child (or child to parent).
- Grandchildren – €31,865 from each grandparent to each of their grandchildren.
- Brother/Sisters – €15,932 to brothers and sisters.
- Nieces/Nephews – €7,967 to nieces and nephews.
In addition to these allowances, it is also possible to make family gifts in cash (dons familiaux de sommes d’argent) of up to €31,865 to each child, grandchild or great grandchild from each ascendant, or, in the absence of these descendants, to a niece or nephew, free of gifts tax.
So, each child has an entitlement from each of their ascendants – parents, grandparents, great-grandparents.
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 so that, for instance, a child may receive gifts from both parents and grandparents, without one affecting the exemption limits of the other.
Thus, parents aged 70 years who gift to their two children a sum of €163,730 each, can make use of the family cash gift allowance, in addition to the general allowance, granting full exemption. In addition, they can also receive the family gifts allowance from their grandparents/great-grandparents.
Even though you can make a gift free of tax every 15 years, if you die before the expiry of the 15-year period then the gift is added to the total value of your estate for the calculation of inheritance tax.
This process is called the ‘rapport fiscal.’
The 15-year period must expire to be clear of any form of taxation.
Nevertheless, provided the 15 years has expired, the allowances are cumulative with inheritance tax allowances.
The child allowances for inheritance tax happen to be the same as those for gift tax.
Accordingly, each child benefits from an inheritance tax allowance of €100,000 on the death of one of the parents, in addition to any expired sums which may have been granted by way of gift.
So, a gift to a child of €100,000 can be added to an inheritance tax allowance of the same amount.
The information on this page is intended as an introduction only and is not designed to offer solutions or advice. Beacon Global Wealth Management can accept no responsibility whatsoever for losses incurred by acting on the information on this page.
If you would like more information and advice geared towards your own personal situation you can contact :
Paul Flintham | International Financial Adviser | Beacon Global Wealth Management| France
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Beacon Global Wealth Management: Central Administration Office, 250 High Street, Guildford GU1 3JG, United Kingdom. Tel: +44 333 241 6966 Email: firstname.lastname@example.org Website: https://beaconglobalwealth.com