To encourage the French not to let the surplus savings accumulated since the first confinement lie dormant, the government has introduced a gift tax exemption scheme for the summer of 2020. This scheme, which applies to gifts of up to 100,000 euros made within the family, will expire on June 30, 2021.
Who is exempt from gift tax?
To qualify for exemption from gift tax, the gift must not exceed 100,000 euros. The gift must be made to descendants, i.e. children, grandchildren or great-grandchildren.
Persons with no offspring may make a gift to the children of their siblings, but not to the children of the spouses of these siblings. The age of the donee and donor does not affect the exemption.
This gift tax exemption applies to gifts made between July 15, 2020 and June 30, 2021. The 100,000-euro limit applies to the sum of donations made by the donor to one or more donees. However, a single recipient may receive several donations of 100,000 euros from different donors.
How should donated money be used?
The exemption from gift tax only applies if the money from the donation is used, within 3 months of receipt, for one of these 3 projects:
- Building a primary residence
- Financing a business
- Carrying out energy renovation work
The principal residence built must be that of the donee. Under no circumstances can it be the property of the donor. The exemption does not apply to off-plan purchases, also known as VEFA (vente en futur état d'achèvement).
If the money received is used to finance energy renovation work, it must be carried out on a property that the beneficiary owns and occupies as his or her principal residence. The exemption cannot be combined with the MaPrimeRénov' scheme. The work concerned is listed in Appendix 1 of the January 14, 2020 decree on the energy transition bonus.
Lastly, the money can be invested to subscribe to the capital of a company with fewer than 50 employees, and whose balance sheet or sales do not exceed 10 million euros a year. In addition, the company must be less than 5 years old, and the donee must manage it for at least 3 years from the date of the capital subscription.
This exemption from gift tax can be combined with the exemption for family gifts of sums of money, which is limited to 31,865 euros every 15 years, as well as with standard tax allowances and temporary gifts of new buildings and building land.