Gift or Donation?
If you want to do something nice for your loved ones, you can give or donate whatever you like to whomever you choose. But there’s a fine line between the gifting and donating, and the reporting requirements and taxes are very different.
Which is which?
When you pass on an asset or a sum of money to someone dear to you, it’s tempting to claim it as a gift rather than donation, to avoid the reporting requirements. Unlike a donation, a gift does not need to be reported or is tax-free.
Gift (or “present”) and donations include items or assets that you can literally “hand over”, such as a sum of money, a piece of furniture, a painting, a piece of jewellery or a car. In both cases, you must want to make the gift or donation, and be acting on your own free will.
But for generosity to qualify as a gift, two conditions must be met:
An event: the gift must be connected to an event for which it is customary to give something, a recurring (birthday, Christmas) or one-time event (such as getting married, buying property, having a baby).
The financial situation on the date the gift is given: the gift must be of modest value with respect to your financial situation and your income. Whether something qualifies as a gift is assessed on a case-by-case basis. There’s no scale for evaluating how “modest” a gift is.
In theory, gifts do not involve any formalities. In practice, when giving a gift, it’s important to retain proof of the gift status when it takes place. So hold on to January’s bank statement if you’ve wired money as a “New Year’s gift”, which should be specified as such.
For donations, you don’t have to have anything in writing. However, the recipient must report it to the tax authorities, even if no duties have to be paid. They can do this free of charge.
Now that the system for registering donations has been moved online, the recipient can file the report and pay any dues owed right from their personal account at www.impots.gouv.fr.
What about taxes?
Remember, a gift is not taxable. A donation, on the other hand, is taxable based on your family ties to the donee. Abatements or exemptions(1) may apply that reduce the taxable amount and are renewed every 15 years, including:
a €100,000 abatement on donations to each child,
€31,865 for donations of money made by a donor under 80 years old to an adult beneficiary – a child or grandchild of the donor, or a nephew or niece if there are no direct descendants, as long as the report is filed within a month of the date of the donation,
€159,325 in further abatement for donations to a person with a disability.
Together with your advisor, our experts are on hand to assist help you and your loved ones as you consider your options.
(1) These abatements or exemptions apply to donations made by each donor and for each donee.
Would you like to discuss this subject further with us?
This is an advertising document, which holds no contractual value. It is not intended to provide an investment service, does not constitute investment advice nor a personal recommendation in insurance, nor any form of canvassing, nor legal, tax or accounting advice from Societe Generale Private Banking France. The data contained in this document are provided for information purposes only, are subject to change without notice, and are aimed at helping guide the decision-making process. Under no circumstances does any information on past performances contained in this document guarantee future performances. Before acquiring any investment service, financial product or insurance product, potential investors (i) must read all the information contained in the detailed documentation on the service or product under consideration (prospectus, regulations, "Key Investor Information Document", Term Sheet, contractual terms of the investment service, etc.), paying particular attention to that concerning the associated risks; and (ii) consult with their legal and tax experts to assess the legal and fiscal implications of the product or service under consideration. Investors shall obtain more detailed information from their Private Banker who can also assist in determining eligibility to the product or service under consideration which may be subject to conditions, and whether such product or service meets their needs. Accordingly, Societe Generale Private Banking shall under no circumstances be held liable for any decision made by an investor on the basis of this information alone. These forecasts about future performances are based on assumptions which may not be realised. The scenarios presented are estimates of future performance, based on historical data on how the value of an investment varies and/or on current market conditions, and are not precise indications. The yield obtained by investors is susceptible to change depending on the performance of the market and on the holding period of the investment by the investor. Future performance may be subject to tax in accordance with the personal situation of each investor, and is susceptible to change in the future.
For a more comprehensive definition and description, please refer to the prospectus of the product or, if necessary, to other regulatory documentation (where applicable) before making any investment decisions.
This document is confidential and intended solely for the recipient; it may not be made public or disclosed to any third party, and may not be reproduced in whole or in part without the prior written agreement of Societe Generale Private Banking. Click here for more information.
The sale of a business: Key issues and best practices?
Hospitality is a vibrant sector that’s always on the move and influenced by a multitude of economic, social and...
When it comes to personal finance, we’re usually advised to keep a little distance, figuratively, from our financial...
Returning from vacation, this article draws a connection between the beauty of archaeological sites and that of a vacuum...
The sun is out and so are the lawnmowers. Cue the friendly banter between enthusiasts of the walk-behind mower, the...