Update on French Taxation with Respect to Gifts and Successions
Although the rules applicable in France with respect to gifts and successions seemed to have been more or less set in stone for a very long time, they have been changing on a regular basis in the past few years.
It is useful to regularly check on the current status of such rules, among others with respect to the amounts of tax allowances or exemptions one can benefit from.
The level of allowances is reviewed annually and has been increased on a regular basis in the past years. It is important for British nationals purchasing in France to have a clear view on the current status of allowances.
The level of allowance depends on the remoteness of the blood relation between a donor or deceased and the beneficiary of a gift or of a succession.
The highest tax allowance is between parents and children in the amount, currently, of 156,974€ per child and per parent (ie: a child can receive twice this amount in total from his two parents). In the case of a gift, this amount is reconstituted if the donor survives for a period of six years after the gift. It should be noted that this doesn’t mean that the gift would not be taken into account for the purpose of assessing the shares to which the various children may be entitled to. For example, in the case of a couple with three children, one of which has received a gift up to the level of the tax allowance over six years ago at the time of death eg: of the father, then this will be taken into account in order to assess what the other children will be entitled to (their share will be increased).
Between brothers and sisters, the allowance is only 15,697€, and between more remote siblings such as aunts, nephews etc., the amount is only 7,849€.
It should be noted that between spouses and parties to a PACS (the French equivalent of a civil partnership which can be contracted between co-habitants and not only same sex couples) there are no death duties, whatever the amount received. However, in the case of a gift, there is only a tax allowance of 79,533€. It is important to keep an eye on the evolution of such allowances as in the current economic context, it is possible that such levels of allowance, which are fairly generous, could be reviewed downwards in future.
‘Exceptional gifts’ can be made to a child or grandchild or great grandchild who is of age, in the amount of 31,395€, provided that the gift is made in cash and if the donor is aged less than 65 years if the beneficiary is a child, or less than 80 years if the beneficiary is a grandchild or great grandchild. This is a one off gift and can only be made once between the same parties.
It should also be noted that there is a current tendency of harmonisation between civil partnerships and the PACS to the effect that both will eventually be fully recognised in France and the UK.
Between grandparents and grandchildren, the tax allowance for gifts is 31,395€ and between great grandparents and great grandchildren 5,232€.
Finally, there is a tax allowance ‘by default’ which applies to successions in the absence of any specific tax allowance in the amount of 1,570€.
Please note that gifts or successions between unrelated people i.e. with no blood or marriage relation are taxed at the discouraging rate of 60% of the value transferred.
Hervé Blatry
Avocat
TEE FRANCE
STANLEY TEE LLP
High Street
Bishops Stortford
Herts CM23 2LU
Tel 01279 710621 and 01279 710654
[email protected]