2023-12-14 09:10:00
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For those planning to pass on part of their wealth to their children or grandchildren, Christmas offers an ideal opportunity. However, it is essential to understand the tax implications and the best strategies for making these donations.
The holiday season is often synonymous with generosity and sharing. For those planning to pass on part of their wealth to their children or grandchildren, Christmas offers an ideal opportunity. However, it is essential to understand the tax implications and the best strategies for making these donations. Discover the most judicious ways to make family donations, while respecting legal and tax frameworks.
The customary present: an option without tax constraints
The customary present is a gift given on special occasions, such as Christmas, a birthday or a significant family event. Its main characteristic is that it does not require a declaration to the tax authorities, and it is not subject to gift tax.
For a gift to be considered a customary present, two essential conditions must be met:
- Special Occasion: The gift should be given on a specific occasion, such as Christmas.
- Reasonable in relation to the donor’s means: the amount or value of the gift must be in line with the donor’s financial means. There is no official numerical limit, but it is essential that the amount is considered reasonable.
The major advantage of the present usage is the absence of administrative formalities. There is no declaration to make, nor gift tax to pay, making the process simple and straightforward.
However, caution should be exercised. If the tax administration judges that a gift is disproportionate to the donor’s income and assets, it can reclassify it as a manual donation, subject to declaration and taxation.
Manual giving: flexibility with limits
Manual donation consists of the transmission of movable property (money, jewelry, works of art, etc.) without any particular formality at the time of the donation. Unlike the present practice, manual donations can concern higher amounts or values and are likely to be subject to specific tax rules.
Each parent can give up to 100,000 euros to each of their children without paying inheritance tax, this amount being renewable every 15 years. For a grandparent, the reduction is 31,865 euros per grandchild, also renewable every 15 years.
These reductions can be combined with other types of donations, such as family donations of sums of money, thus allowing a larger transfer free of tax.
Although the manual donation can initially be made without formalities, it is subject to declaration in the event of disclosure to the tax administration, for example when filing the inheritance declaration or in the event of an audit.
It is essential to respect the exemption limits to avoid inheritance tax. A donation exceeding these limits will be taxed according to the scales in force.
Family donation of sums of money: a specific opportunity
This type of donation allows money to be transferred while benefiting from a favorable tax regime. It is distinct from classic manual donation and is specifically regulated by law to encourage the transmission of assets within families.
The donor must be under 80 years old at the time of the donation and the beneficiary (donee) must be an adult or emancipated.
The gift must be made in full ownership to a child, grandchild, great-grandchild, or, in the absence of direct descendants, to nephews and nieces.
Each donor can give up to 31,865 euros every 15 years to each eligible beneficiary, without these sums being subject to gift tax. This reduction can be combined with that of the manual donation. For example, a parent can give a child up to 131,865 euros (100,000 euros manual donation + 31,865 euros family donation) every 15 years without tax consequences.
Although the family donation of sums of money benefits from a duty exemption, it must be declared to the tax administration. This declaration makes it possible to formalize the donation and to monitor the allowances used.
Making a donation to your loved ones at Christmas is a meaningful gesture. By choosing your type of donation wisely, you can not only demonstrate generosity, but also optimize your tax benefits. You can therefore consider spreading the donations over several years to optimize the reductions and minimize the tax impact.
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