Giving money from hand to hand: the gift tax in France
You can give a sum of money to one of one's children. A gift of this type "from hand-to-hand" must comply with certain legal and tax rules and may generate conflict within the family if it is made without careful consideration.
Are gifts from hand-to-hand authorised by law?
Of course. The law does not prevent parents from helping their children by making a "large gift ". A gift of this type, from hand-to-hand, can only relate to movable property (sum of money, jewellery, picture, car, shares...). There is no need for a written document.
Are gifts made from hand-to-hand taxable?
Gifts made from hand-to-hand are not liable for taxation unless they are reported to the tax authority.
In practice, a gift of this type is liable to be taxed in the following situations:
- when the donee declares the gift spontaneously to the tax authority;
- when the donor has made another gift to the same donee, or when the donee has inherited it;
- when the gift was notified to the tax authority in response to a request for information or as the result of a tax inspection.
Gifts from hand-to-hand are taxed on the same scale as gifts. A gift may therefore be tax exempt. A parent can give up to €100,000 to each of their children without paying any tax, every 15 years.
This allowance may be combined with another allowance of €31,865 which is granted every 15 years for gifts of money if the parent is aged under 80 and if the child is an adult. Beyond this point, tax is due.
What are the dangers of making a gift from hand-to-hand?
- The gift from hand-to-hand must be revalued upon the death of the donor (unlike the inter vivos property divisions);
- The donee is bound to the report for the purpose of equality between the heirs (whoever they may be). The gift from hand-to-hand is therefore not only a means of benefiting an heir ;
- The gift from hand-to-hand by definition is not accompanied by any very useful clauses (right of return, prohibition of alienation ...)
- Often the opaque nature of the gift from hand-to-hand can generate family tensions: proof to report, revalorization ... Even the donee can make the expenses in the event of divorce because this gift is a good own (under the universal community of assets ) but must he still be able to prove the gift?
That's why it is always preferable to ask : " why give? " and " how to give? ". Is the objective to benefit one child in comparison with the others, or not? Is this child single? Married? If so, under which matrimonial property regime? Is the child living with a partner? Has the child entered into a civil partnership?
A gift from hand-to-hand can be a rapid, simple and sometimes economical way to transfer certain assets. However, unless all the legal, tax and family consequences are studied, the gift may prove to be a poisoned chalice for everybody.