Jennie Poate, an International Financial Advisor at Ark Capital explains how French Gift Tax works…
In simple terms, with French gift tax the donor makes the gift. The donee receives the gift and is responsible for paying any tax that is due (droits de donation).
Residency
If the donor is tax resident in France, tax is payable on all worldwide assets transferred in excess of the allowances available.
If the donor is non-resident, but the donee has been a tax resident of France for at least six out of the last ten years, liability arises on all worldwide assets transferred to the donee in excess of the allowances available.
If both donor and donee are non-resident, tax is payable on the gift of real estate only in France.
Relationships
The gift free allowances are only for family members and are variable according to the relationship to the donor. The donor must also be under 80 years old, and the donee over 18 for the allowances to apply.
A gift made every 15 years may be made free of gift tax, provided it does not exceed the exemption limits (below). If the donor dies within the 15 years the gift may then incur a tax penalty.
The exemption limits in 2024 are as follows:
- Spouses/Partners – €80,724 between spouses, PACS 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 tax-free family gifts in cash (dons familiaux de sommes d’argent) of up to €31,865 to each child, grandchild, or great grandchild from each donor, or, in the absence of these descendants, to a niece or nephew.
These allowances can be cumulative so, for instance, a child may receive gifts from parents, grandparents and great grandparents individually, without one affecting the exemption limits of the other.
Survivorship Period
Even though a gift may be made tax-free every 15 years, if the donor dies within the 15-year period then the gift is added to the total value of the estate for the calculation of inheritance tax. This process is called the ‘rapport fiscal.’
The child allowances for inheritance tax are the same as those for gift tax. If gifting real estate then the situation can be made easier by applying the ‘reversionary interest’ in the property, whilst the donor retains the ‘life use’ of the property.
If the gifts made are above these exemption limits, then tax is applied from 5% (less than €8,072 up to 20% (from €15,932 – €552,324).
Contact Jennie Poate at: jennie@ark-wm.com to find out more and arrange a consultation.
The information contained herein is provided for general guidance and informational purposes only, based on our understanding as of the date of publication. It does not constitute financial, legal, tax, or investment advice, nor should it be relied upon as a basis for making financial decisions. Ark Capital accepts no liability for any loss arising from reliance on the content of this document. Where necessary, professional advice should always be sought.
Ark Capital is licensed to provide financial investment advisory services under the Markets in Financial Instruments Directive (MiFID) and holds a CIF licence, reflecting our commitment to delivering transparent, personalised investment solutions. We are also authorised under the COA to offer insurance and reinsurance services designed to protect our clients’ wealth. Registered in France under licence number 22000690, Ark Capital operates in full compliance with European regulatory standards.
Ark Capital is a cross-border wealth management firm dedicated to empowering expatriates and international clients with expert financial strategies. Founded in 2021 and headquartered in Rouen, we combine French heritage with global reach to deliver personalised advice in investments, pensions, insurance, real estate, and tax planning. With a strong regulatory foundation and a client-first approach, we offer comprehensive services including wealth management, retirement planning, life and medical insurance, and tax-efficient solutions backed by digital tools and multi-jurisdictional expertise.
