12. Gift Tax in France
- Definition of a 'Gift'
- Liability to Gift Tax
- Rates of French Gift Tax
- Gifts of Real Estate
- Gifts & French Inheritance Laws
- Procedures for Declaring Gifts
12.5. Gifts and Inheritance Laws in France
There are two important points to bear in mind concerning the relationship between gifts and French inheritance laws.
i. Reserved Rights
First, whilst there are gift tax allowances, French inheritance law places a limit on the amount of your property that you can freely dispose of by way of gifts.
This is because children are protected heirs, with entrenched inheritance rights.
Thus, for example, if you are married, the maximum amount that you can gift to your spouse will depend on the number of your children, as their entitlement is as follows:
- One child – half your estate;
- Two children – one-third of your estate;
- Three or more children – one-quarter of your estate.
If go beyond the reserved quota in the amount that you gift to one member of your family over others, then a balancing calculation will be done with the inheritance, with any excess added back to the estate.
That said, it is possible under European laws to adopt the inheritance laws of your home country, to get around the entrenched rights of children, and there are also other inheritance planning strategies you can use. See our Guide to French Inheritance Laws and Taxes.
ii. Survivorship Period
Second, even though you can make a gift free of tax every 15 years, if you die before the expiry of 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 15-year period must expire to be clear of any form of taxation.
Nevertheless, provided the 15 years has expired, the allowances are cumulative with inheritance tax allowances.
The child allowances for inheritance tax happen to be the same as those for gift tax.
Accordingly, each child benefits from an inheritance tax allowance of €100,000 on the death of one of the parents, in addition to any expired sums which may have been granted by way of gift.
So a gift to a child of €100,000 can be added to an inheritance tax allowance of the same amount.
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