Inquire
What is a donation?
A donation is an act by which a person, the donor, voluntarily and irrevocably transfers ownership of something, free of charge, to another person, the donee (Civil Code, Art. 894).
This transfer of assets may involve movable property (money, a car, jewelry, etc.) or immovable property (a house, land). A donation requires the acceptance of the donee, and in some cases, the intervention of a notary is mandatory.
Any written deed of donation must be executed before a notary, otherwise it is null and void (Civil Code, Art. 931). Therefore, it is not possible to draw up a private agreement. However, property can be transferred without a formal deed through a hand-to-hand gift, meaning a “hand-to-hand” transfer (for example, a bank transfer).
To learn more, see the article on hand-to-hand gifts.
If the donation concerns real estate, for instance, a hand-to-hand gift will not be possible. An authentic deed prepared by a notary is required.
Regardless of its form, a donation is subject to taxation.
How is a donation taxed?
In France, a donation is subject to transfer duties free of charge (droits de mutation à titre gratuit, DMTG), commonly known as gift tax.
These duties are calculated based on the fair market value (valeur vénale) of the assets transferred, as declared by the donee, after deducting one or more tax allowances, depending on the situation (French General Tax Code, Articles 777 to 790).
What tax allowances can you benefit from in the case of a donation?
A tax allowance is a reduction applied to the taxable base of an income or transfer. In the case of a donation, it represents the amount below which the gift is not taxed. For example, each parent may give up to €100,000 to each of their children tax-free.
These allowances are set by the French General Tax Code (CGI) and can be renewed every 15 years between the same donor and donee.
The amount of the allowance depends on the degree of relationship between the donor and the donee.
Additional allowances
Some allowances or exemptions can be combined with other personal allowances.
- Disability allowance (Article 779-II of the French General Tax Code)
To benefit from this additional allowance of €159,325, the donee must be unable to work under normal conditions of profitability due to a physical or mental disability, whether congenital or acquired. - Exemption for family cash gifts (Article 790 G of the French General Tax Code)
A donor may also make a cash gift of up to €31,865 tax-free to the benefit of:- a child, grandchild, or great-grandchild,
- or, in the absence of descendants, a nephew or niece, or by representation, a grandnephew or grandniece.
(For “nephew” or “niece,” this refers exclusively to the children of the donor’s brothers or sisters, excluding, where applicable, those of their spouses.)
Two additional conditions must also be met: the donor must be under 80 years old, and the beneficiary must be of legal age.
Note: To benefit from this additional allowance, the donee must declare the gift to the tax authorities within one month following the hand-to-hand donation (using form Cerfa No. 2735-SD).
This allowance can be renewed every 15 years between the same donor and donee.
Gift tax scale
For donations exceeding the applicable allowances, the gift tax scale applies, which also depends on the degree of relationship between the donor and the donee (French General Tax Code, Article 777).
The tax may be paid either by the donor or by the donee.
Why consult a notary for a donation?
The notary ensures the security of the transaction, assesses its civil and tax implications, and helps optimize the transfer of assets. They can also provide advice on donations involving specific clauses, such as shared donations, progressive donations, residual donations, or cross-generational transfers.
To note:
• A donation allows you to transfer assets during your lifetime, but it is subject to specific tax rules.
• It is important to plan to benefit from allowances that can be renewed every 15 years.
• Consulting a notary is highly recommended to ensure the validity and legal compliance of the deed.
• A sound estate strategy should take into account donations, inheritance planning, and life insurance, which is subject to a separate tax regime.