Understanding French Inheritance: Gift Tax or “Droits de Donation”

In France, as in many countries, it is possible to gift money or property to a child, spouse, or other family member – known as a “donation” in French. However, there are strict rules that govern the kinds of gifts and transfers of ownership that can be made, and the amount of gift tax or “droits de donation” that the recipient will be subject to.

Generally, in France, a “gift” for gift tax purposes is considered to be a large sum of money or the transfer of assets (typically real estate). There are various exceptions that include “reasonable gifts” (for example, wedding or birthday gifts), subsistence support (for example, a parent helping out with ‘everyday payments’ such as rent and bills), and loans. These instances are judged on a case-by-case basis, but typically won’t be subject for gift tax. However, for cash or real-estate gifts over the value of €100,000, the donee will be liable for French gift tax.

Note that larger gifts will likely need to be declared on your tax return, even if gift tax is not due, and loans of more than €5,000 must also be declared on your tax return, even in the instance of an interest-free loan to a family member or friend.

You can read more about French gift tax exemptions here (in English) and learn more about gifts and gift tax here (in French).

French gift tax liability depends on several criteria including the tax residency status of the donor and donee, the amount and nature of the gift, and the location of the gift (in the instance of physical assets or real estate).

Cross-border tax liabilities can be complicated, and non-French resident donors or donees may also be subject to taxes in their country of residence, or be subject to different rules due to a double-tax treaty (this applies to US citizens, for example), but here are some general rules of thumb:

• If the donor is tax resident in France, then gift tax will be due on the transfer of any worldwide cash or assets over the tax-free threshold.
• If the donor is not tax resident in France, but the donee is a tax resident of France (or has been for at least six out of the past 10 years), then gift tax will be due on the transfer of any cash or worldwide assets over the tax-free threshold.
• If neither the donor or donee are tax resident in France, then then gift tax will be due on the transfer of any French real estate over the tax-free threshold.

Under French law, there is a gift tax exemption for gifts made between family members up to a certain threshold – all gifts over this will be subject to gift tax. This tax allowance is applied to gifts made over a 15-year period and only apply if the donor does not die within said 15-year period. In that instance, gift tax may still be applied upon the death of the donor.

The tax thresholds are subject to change, but in 2023 they are set at:

• €100,000 from each parent to each of their children (or from each child to each parent).
• €80,724 between spouses who are married, PACSed, or in a civil partnership.
• €31,865 from each grandparent to each of their grandchildren
• €15,932 between brothers and sisters
• €7,967 to from each aunt/uncle to each of their nieces and nephews.

An additional €31,865 cash gift is allowed tax-free from any parent, grandparent, or great-grandparent less than 80 years old to each descendent over the age of 18 (or to a niece or nephew if there are no direct descendents).

These allowances are cumulative, meaning you could receive a total of €131,865 from each parent every 15 years free from gift tax.

Read the official rules here.

Whether you own French property, live in France, or have assets and investments in France—FrenchEntrée is here to help with all your legal, inheritance, and estate planning questions. Our Essential Reading articles will talk you through all the basics, from French succession law and gift tax to writing a French Will, understanding your legal rights in France, and signing legally binding contracts. Both French and international law can be complicated, so if in doubt, we always advise discussing your personal situation with one of our recommended legal advisors.

Disclaimer: This guide is provided for general information purposes only and is not intended to be a substitute for professional advice regarding any aspect of your estate planning, tax liabilities or legal matters in France. FrenchEntrée cannot be held responsible for the consequences of decisions or actions you may choose to take in connection with French tax declarations or legal liabilities.