France proposes €150,000 tax-free family gifts in 2027 budget

The government is planning to introduce a six-month window starting in January when French tax residents can gift up to €150,000 to their children tax-free. 

The aim of the measure - outlined in France’s 2027 budget - is to encourage intergenerational wealth transfer and inject funds into the economy by helping younger people obtain funds that they could use to purchase property and invest.

It would also allow people to avoid potentially high inheritance taxes, by gifting amounts that would otherwise be inherited before they pass away.

The six-month period would also see a reduced tax rate for those going over the proposed limits. 

While it would see a drop in government revenue from gift taxes (and in the longer term, inheritance taxes), the government hopes it will provide a cash injection into the economy that kickstarts spending, amid concerns that older generations are sitting on stagnant wealth. 

In turn, it would generate more money for the government than directly taxing inheritance.

It comes as inheritance taxes become an increasingly virulent point of debate, with France’s largest union the CFDT arguing that inheritance should be taxed “from the first euro” and others arguing that inheritance taxes are already too high. 

As with all current plans included in the budget, it is subject to whether the text passes in its current state, with debates and voting on the measures beginning later this month.

Six-month window for higher tax-free limits

Before getting into the changes, an overview of the current rules is useful. 

Gifts of all kinds (cash or assets) can be made tax-free up to a certain value, based on how the recipient is related to you. 

These limits apply across a 15-year window before resetting, and include:

• For your child: up to €100,000 tax-free

• For your grandchild: €31,865 tax-free

• For your nephew or niece: €7,967 tax-free

• For your great-grandchild: €5,310 tax-free

These 15-year limits apply to gifts to each person, and are not wholly cumulative between different individuals. 

For example, you can gift your child two €50,000 gifts, and two grandchildren €31,865 each in a 15-year window without incurring gift taxes, but if you gift the same grandchild €31,865 twice within the 15-year window, gift tax will be due.

However, if the donor is under 80, and the recipient an adult, cash gifts benefit from an additional €31,865 in tax-free allowance.

In contrast, tax-free limits on inheritance are as follows:

• For your child: up to €100,000 tax-free

• For your grandchild: up to €1,594 tax-free,

• For your nephew or niece: up to €7,967 tax-free

• For your great-grandchild: up to €1,594 tax-free

There are no age-based allowances for inheritance tax.

Article 4 of the 2027 budget outlines the plans for a temporary tax-free window. 

Between January 1, 2027 - June 30, 2027, the under-80 tax-free allowance would be boosted from €31,865 to €50,000. 

This increased tax-free allowance (€18,135) would apply to new gifts, even if the donor had previously reached the tax-free gifting threshold.

In the case of a parent gifting money to a child, this means that an additional €50,000 could be gifted on top of the €100,000 tax-free gift you are entitled to. Hence €150,000 in total is available for gifting for the six-month duration of the offer. 

For a grandchild this drops to €81,865, and for a great-grandchild to €55,310. In all cases, gifting would be much more effective than waiting for inheritance.

A second measure included in the budget – also applying across the six-month period – is a limit on gift taxes. 

Gift taxes, similar to income tax, are progressive, with different percentages based on the amount given. 

These percentages range from 5% on the first amount after tax-free limits are reached (up to €8,072) rising to 45% for amounts over €1,805,677. For non-direct heirs, taxes can reach up to 55%. 

This will temporarily be replaced by a flat 6% tax on gifts up to €100,000, provided the recipient is over 18 but under 50 years old.

This will further be reduced to 5%, if the recipient donates at least 1.1% of total received funds to charities and organisations aimed at helping the most disadvantaged people in France. 

The limit applies only on top of tax-free amounts, and can be combined with the additional tax-free thresholds mentioned above.

What about gifts to recipients outside of France? 

Article 4 of the budget does not include any additional rules on recipients and donors, meaning current legal mechanisms apply. 

This means that French gift tax rules apply when the person giving the gift is classed as a French tax resident. The location of the recipient does not matter, nor the location of the assets themselves (for example, if held in a UK bank account by a French tax resident). 

For example, a resident in France giving a gift to a family member not living in France will pay French gift tax on the gift, and will also benefit from the temporary increased allowances included in the 2027 budget.

This applies to countries that have a dual tax treaty with France covering gift taxes – such as the US – or countries where no gift tax exists, such as the UK.

France has no treaties covering gifts with Canada, or Australia, for example, but recipients in these countries do not pay inheritance tax on amounts received from abroad, so only French rules would apply.

In other cases, where recipients are living in countries where there is no tax treaty covering gifts with France and gift taxes are charged, taxes may be levied twice.

It is best to check local rules in the recipient's country before making a gift, and seek professional dvice.

In cases where both the resident and recipient live abroad and the sender is not a French tax resident, French gift taxes apply only on French-taxable assets.

Gifts also have to be declared online in France within one month of being received. 

You can read more about inheritance rules in our guide here.