Small ticket for the trennes or big check? Christmas is a good time to donate money: from what amount does a gift become … a donation which must be declared?
Donating money to your children, grandchildren or even your brothers, sisters, nephews, nices or even your friends does not necessarily force you to fill out a declaration. It all depends on the amount and importance of your assets. Moreover, even if you have to declare a donation of money from relatives, you benefit in some cases from a tax deductible, with more or less large amounts depending on the identity of the recipients.
Small Christmas present: nothing to say!
To avoid any formalism, the donation of money must be considered as a present in use, as confirmed by Xavier Rohmer, associate lawyer at August Debouzy. This present usage constitutes a manual gift exempt from gift tax which does not require any particular declaration to the tax authorities.
Since this notion of use is so completely random, how do you know whether or not your donations must be declared? The lawyer of the cabinet August Debouzy recognizes that it is impossible to deliver precise thresholds, as well in amount as in percentage of the inheritance. But it is reassuring, the essential as long as these donations do not depart from the norm: On reading the case law, the customary presents are defined as the gifts made on the occasion of certain special events for which it is customary to offer a gift to loved ones (engagement, marriage, birth, Christmas, passing an exam …) and which do not exceed a certain value, given the donor’s fortune .
The problem is that the Civil Code is limited to the following definition: The present nature of use is assessed on the date on which it is granted and taking into account the assets of the settlor. In other words, the amount will not be the same from one taxpayer to another. There is an extreme disparity in values according to the profiles, explains Xavier Rohmer. For example, a gift worth 10,000 euros could be considered a taxable donation in a modest household while this gift would be considered a customary present in a more affluent household.
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A value that must represent a very limited proportion of the donor’s assets, adds Xavier Rohmer. But how much? A proportion of 1% 2% or even 2.5% of annual income and / or assets is often mentioned in this regard, based on case law. But beware: questioned by a deputy (1) on this percentage of 2.5%, the Bercy services clearly recalled that there is no maximum threshold, either in percentage or in absolute value, making it possible to distinguish present of use and other donations. Short: case by case, depending on the donor’s fortune (2). It’s up to you to limit yourself to reasonable amounts!
When can a gift be reclassified as a donation?
Question (not if) box: should we avoid checks or transfers, in order to avoid leaving traces? The support of the donation, cash, check or transfer, does not change anything. Everything is a matter of proportion, says Christine Valence, wealth engineer at BNP Paribas Banque Prive. If you ever get into the habit of making too large donations, you run the risk of seeing these sums reclassified as donations: Requalification can occur during a tax audit, explains Xavier Rohmer. When can this control occur? Here again, there is no rule … The history of these gifts can also be studied during an inheritance, if the heirs point to too large a movement of money towards a loved one, member of the family or no.
There is abundant case law on the subject, adds Lila Vaisson-Bethune, director of wealth engineering at BNP Paribas Wealth Management. One example among others: the donation of a car called into question as a gift of use if this car represents a significant value in terms of the patrimony of the donator.
Big gift: declare … but not necessarily imposed
When the donations go beyond a conventional framework (Christmas, birth, Pacs, birthday, etc.), and when it is more a question of passing on part of your assets to your loved ones, then these payments must be declared. For this, you must complete the form 2735, or declaration of manual gifts and sums of money, document to be deposited at the tax office in the month following the donation.
This exemption is cumulative with personal allowances depending on the parentage 頻, adds lawyer Xavier Rohmer. This gift tax allowance varies according to the identity of the beneficiary (see below). Depending on the parentage, the tax-free donation can reach large sums. The fact of declaring the donation does not necessarily imply the payment of donation rights. In the case of family donations, a exemption of 31865euros if the beneficiary is a child, grandchild, great-grandchild or even nephew or nice in the absence of a descendant. This exemption is valid for a period of 15 years: a grandparent can therefore give, in several installments over 15 years, up to 31865 euros each of his grandchildren. However, the beneficiary must be of legal age and the donor must be under 80 years old.
Gift tax reductions based on parentage
The tax allowance applies to the donor (the one who gives), without age limit. It concerns all donations for the same beneficiary over a period of 15 years.
- 80724euros allowance for a donation to the spouse or PACS partner;
- 100,000 euros per child;
- 31865euros per grandchild;
- 5310euros per great-grandchild;
- 15932euros for each brother or on;
- 7967euros for a nephew or a nice.
The exceptional exemptions adopted in the context of the health crisis are added to these existing thresholds: 100,000 euros in additional family donations, until June 30, 2021, but only if these family donations are used to build or renovate the beneficiary’s home, or for an investment in the capital of the company (less than 50 employees) of the beneficiary of the donation.
How to add the allowances and the family donation exemption?
An example. A 75 year old grandmother can give a grandchild up to 63730 (31865 exemption from family donation + 31865 allowance), in 15 years, without having paid taxes, but she must declare these sums to the tax authorities.
This same grandmother can give 131,865 (31,865 exemption from family donation + 100,000 allowance) his son.
On the other hand, if this grandmother wants to give its on, it does not benefit from the family donation exemption: it can only give 15932 tax free.
| Who gets the money? | How many? | When? | Declaration required? |
|---|---|---|---|
| Present in use | |||
| All (regardless of parentage) | Without precise limit but of a reasonable amount1 | For a one-time event (birthday, Christmas, marriage, birth, etc.) | |
| Exemption for family donations | |||
| Child, grandchild, great-grandchild2 | 31865 by beneficiary3 | Limit valid on 15 years | |
| Donation tax reductions | |||
lice Where | 80724 | Limit valid on 15 years | |
| Child | 100,000 for each child | ||
| Grandchild | 31865 for each grandchild | ||
| Great-grandchild | 5310 by beneficiary | ||
| Brother or on | 15932 by beneficiary | ||
| Nephew or nice | 7967 by beneficiary | ||
1 No more than 1% 2% of the patrimony and / or annual income of the person who gives, according to case law.
2 Even nephew or nice in the absence of a descendant.
3 Under certain conditions: donor under 80 years of age, and beneficiary of full age or minor manciped.
Taxes: this jackpot that you can give your children without paying anything
(1) Written question from LREM deputy Annag Le Meur. Response from the Minister of Public Accounts on December 31, 2019.
(2) The tax documentation confirms that there is no precise rule concerning the percentage of the value of the donor’s patrimony for the qualification as a customary gift: The tax administration does not set any rule of proportionality of the present in relation to the fortune or the income of the donor and assessed on a case-by-case basis the nature of the donation (…) (Rescript of April 3, 2013: criteria for distinguishing between manual donations and customary gifts).