Taxes: at Christmas, how much can you give to a loved one without paying gift tax?

The end of year celebrations are often an opportunity to spoil your family or friends. And by operating within the framework of the customary present, your generosity is not taxed. Here is how to proceed to act on the nails.

• 
  

  To safeguard
  

  
  
  

  Saved
  

A beautiful watch, a piece of jewelry, a valuable object or a more or less tidy sum of money… For Christmas, there is no shortage of gift ideas to place under the tree. But don’t forget, before showing off your generosity, that it has its limits. Because if you can gratify your loved ones – family and friends – thanks to a “present of use“, you cannot exceed the limits, otherwise your delicate attention will be reclassified as a disguised donation… with potential rights to pay to the tax authorities.

But what are the rules to respect so as not to go beyond the framework of present usage? “There is no text which defines the present tense”, immediately specifies Maître Stéphanie Gaillard, spokesperson for the Chambre des notaires du Grand Paris. But case law provides a first answer. “Usual gifts, which escape the rules of donations, are gifts made on the occasion of certain events, in accordance with custom, and not exceeding a certain value”thus affirms the Court of Cassation in a judgment rendered in 1988.

Two main conditions must therefore be met for a gift to be considered a customary present and to escape tax, according to Stéphanie Gaillard: “The value of the gift must be proportionate and it must be offered on the occasion of an exceptional event, a special occasion.” Concerning the value of liberality, “if it is a sum of money, the tolerance of the tax authorities oscillates between 2% and 3% of annual income of the donor”figures the notary. If the gift is a piece of jewelry, a work of art or even a piece of furniture, also set a limit corresponding to 2% or 3% of your assets to set a maximum value for the present. Nothing exaggerated, then.

The risk of reclassification as a disguised donation

The customary present being offered on the occasion of a particular event, the expert also recommends keeping proof of this occasion (a diploma for example) to possibly justify your action upon request from the tax authorities. And, above all: “Avoid monthly transfers. There must be no recurrence.”she warns. Going beyond the framework of the exceptional just as exceeding the tolerated thresholds exposes you to requalification in donation disguised.

By respecting these few rules, you will therefore protect yourself from a possible recovery. Your steps stop here. No need to notify the tax authoritiesonly to preserve all traces of your present. Evidence that will be useful to you if the administration contacts you to justify the origin of certain sums at the time of a divorce or a real estate purchase. And if you intend to happily exceed the tolerance of 2% to 3% of your income or your assets, favor a donation before a notary or a manual donation, acts revealed to the tax authorities which will give rise to the payment of donation taxes if you have already exhausted your reduction of 31,865 euros for donations family sums of money and that depending on your relationship with the person awarded, which reaches a maximum of 100,000 euros between a parent and their child. Rebates renewable every 15 years.