How is tax applied to gifts and bequests to grandchildren in France?

Partner article: How to navigate the relevant inheritance rules in France as gifts from grandparents is a complex area 

11 October 2021

'For grandchildren, lifetime gifts are more beneficial for them than inheriting on death' - John Kitching, French Law Consultancy Pic: Olena Yakobchuk / Shutterstock

Reader question: We live in France. My children are well off, so I want to help grandchildren and godchildren with gifts or in my will. My wife has limited assets so I plan to gift her some to maximise my allowances. Will this work?

Gifts from grandparents is a complex area, and needs in-depth advice but I can set out some unexpected things to watch out for.

First, in France you can only gift the part of your estate not reserved for children under French rules.

The EU Succession Regulation allowing you to bypass French inheritance rules on children’s reserved shares of the estate does not apply to gifts. (Note, a new French law also means children ‘disinherited’ in a will could ask for compensation from French property, but it would only apply where they ask for it.)

Gifts between spouses attract a tax-free allowance of €80,724. Tax is charged on any amount above on a sliding scale from 5% to 45%. If a spouse inherits your estate on death, there is no inheritance tax.

For grandchildren, lifetime gifts are more beneficial for them than inheriting on death. A lifetime gift from each grandparent to each grandchild attracts a tax-free allowance of €31,865 every 15 years, with the sliding scale of tax applying above that amount.

There is an additional ‘family’ gift tax allowance of €31,865 every 15 years which each parent, grandparent or great-grandparent can leave to each of their children, grandchildren, and great-grandchildren.

This must be a money gift (bank transfer or cheque) and must be declared within a month of the gift or you lose the allowance. The donor must be under 80 and the recipient over 18.

If grandchildren inherit on death (unless in place of a predeceased parent or one who renounced their rights), their allowance is €1,594 followed by the sliding scale.Gifts to godchildren who are not blood relations attract an allowance of €1,594.

Author: John Kitching, French Law Consultancy. French Law Consultancy provides French legal advice

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