Among France’s many fiscal quirks, gift tax (droits de donation) is one that often leaves expatriates scratching their heads.
Who needs to declare gifts? Are there allowances to soften the blow?
And what happens if you ignore the rules?
This article clarifies these points for French residents, including the new 2025 rule for first-home purchases, to help you navigate the system with confidence.
What is gift tax?
French gift tax applies to any transfer of assets, be it cash, property, or that priceless collection of vintage teapots, given without expecting anything in return.
As a French resident, you are liable for tax on your worldwide assets.
Typically, the recipient pays the tax, not the giver.
However, if the recipient lives outside France, the donor must handle the paperwork and ensure the tax is paid.
Which gifts must be declared?
In France, all significant gifts must be reported, whether they are taxable or not.
This includes cash, real estate, or high-value items like a Monet painting (if only!).
The declaration is made using the Cerfa form 2735 SD, titled Déclaration de dons manuels et de sommes d’argent.
You have one month from the date of the gift to file this form.
If you are a French resident gifting to someone abroad, you will need to fill out the form and ensure any tax is paid.
If both donor and recipient are in France, the recipient typically handles the declaration.
Small, customary gifts, such as birthday cash, are exempt and do not require declaration.
However, do not try passing off a €30,000 gift as a “really big birthday present”. The taxman has heard that one before.
Are there allowances?
Here is where things get a bit cheerier. France offers tax-free allowances that reset every 15 years, meaning you can gift significant sums without triggering tax, provided you plan wisely.
The allowances depend on the relationship between donor and recipient.
- Parents to children: Each parent can gift €100,000 per child, tax-free. So, a couple can give €200,000 to each child. If your child is disabled, add an extra €159,325 per parent.
- Grandparents to grandchildren: €31,865 per grandparent, per grandchild.
- Spouses or Pacs partners: €80,724 tax-free. Watch out for this one, which can be a surprise to many! While there is never any inheritance tax between spouses, there may be a tax on lifetime gifts. Indeed, only those with a ‘full community’ marriage regime can avoid the issue of lifetime gifts between spouses. (Note, for example, that the French deem the default UK marriage regime to be ‘separate estates’).
- Family cash gifts: A further €31,865 per donor (parents, grandparents, great-grandparents) to children, grandchildren, or great-grandchildren, can be given in addition to the standard allowances listed above. However, in this case there is one extra rule, which is that a grandparent must be under 80 and the grandchild must be over 18.
For example, a child could receive €131,865 tax-free from each parent, so €263,730 every 15 years. Not bad for a leg-up in life, particularly if a child has generous grandparents to boot.
Boost for first-time homebuyers
In 2025, France introduced a temporary exemption to make life easier for first-time homebuyers.
If you gift money specifically for the purchase of a primary residence, the recipient can claim an additional tax-free allowance of up to €100,000, provided the funds are used to buy or build a new home.
This applies to gifts made until December 31, 2026.
There are a few T&Cs that you should read first, but nevertheless this is a golden opportunity for parents or grandparents to help younger generations get a foot on the property ladder without the taxman taking a cut.
Just do not forget to declare it properly; the Cerfa form 2735 still applies.
What are the risks of not declaring?
Gift tax rules may seem daunting, but they are manageable with proper planning.
Specifically, use your allowances wisely and file declarations on time.
However, if you are considering cross-border gifts, consult a fiscal lawyer to verify compliance in both countries.
Ignoring the rules is a bit like ignoring a French waiter’s suggestion to try the house wine; that is to say it is risky and potentially expensive!
Failing to declare a gift within one month can lead to penalties ranging from 0.2% per month of delay to a hefty 40% surcharge for deliberate non-declaration.
If the tax authorities discover an undeclared gift during an investigation (say, at inheritance time), you could lose the tax-free allowances you would have otherwise claimed.
Worse, the gift could be added back to your estate for inheritance tax calculations, hitting your heirs with a bigger bill.
French gift tax does not have to be a headache, even for expatriates used to different systems.
By leveraging allowances, timing your gifts strategically, and taking advantage of new rules like the 2025 first-home exemption, you can pass on wealth efficiently while keeping the taxman at bay.
Christopher Davenport is a financial adviser at Kentingtons.
