12. Gift Tax in France

1. 12.1. Gift Tax in France Introduction
   12.2. Gift Tax Allowances
   12.3. Rates of French Gift Tax
   12.4. Gifts of Real Estate in France
   12.5. Gifts & French Inheritance Laws
   12.6. Procedures for Making Gifts

12.6. Procedures for Making Gifts in France

No particular procedure is necessary to make a gift, other than gifts involving the transfer of real estate, where it is obligatory to proceed through a notaire.

In this case, there are transfer fees and taxes that are payable, on a scale related to value.

Neither do you need to undertake a formal valuation of the property, but if the tax authority later considers that an incorrect valuation has not been made, they can make a retrospective valuation of the property, on which liability to gifts tax is then assessed.

In practice this situation rarely occurs and the valuation of residential property in France is certainly more of an art than a science, and open to a wide degree of interpretation.

If the gift is not real estate, but a substantial cash gift, you may feel it in the interests of all parties that the act is properly recorded.

In which case, you can either arrange between you to prepare and signed a document, or go in front of a notaire for the documentation to be prepared and signed.

The gift will later be taken into account by the tax authority in calculating inheritance rights and taxes on the death of the donor. This is because the rights of inheritors and taxes that apply on inheritance relate not only to those assets owned on death, but also those disposed of during one’s lifetime.

Needless to say, it is not always easy for the tax authority to establish a full and proper record of gifts made during a lifetime (many are made precisely to avoid taxes and entrenched inheritance rights!), unless they are declared, either by the donor at the time they are made or the recipient on their income tax return.

It is, therefore, not unusual for disputes between inheritors that to bring to light unrecorded gift transactions!

Moreover, in making a gift, if you wish to favour one potential inheritor over another (from that part of the estate freely disposable), then it may well be best that this is properly recorded. Such a gift is called la donation hors part successorale and is best made in front of a notaire.

You are also formally required to declare gifts of money etc to the tax authority using a form which you can download by visiting Déclaration de don manuel.

This is a rule probably honoured more in the breach that in the act, but if you do not declare the gift, and it is later discovered by the tax authority as part of the inheritance process, then your inheritors risk losing the tax allowance that would have otherwise applied.

Gifts of real estate will automatically be notified to the tax authority via the notaire.