Donation: risks related to manual donations

Careful: The hand-to-hand gift should not be confused with the customary present which means, gifts given on the occasion of certain events and not exceeding a certain amount. The customary present is not subject to gift tax (free transfer tax) while hand-to-hand gifts are taxable if the tax administration is aware of these.

Are manual donations authorized by law?

Certainly. The law does not forbid parents from helping their children by giving them a "big present."

This manual donation (from hand to hand) can only relate to movable property (amount of money, jewelry, painting, car, shares, etc.) and does not require any written element.

Are manual donations taxable?

Manual donations are not taxable until they have been reported to the tax authorities.

In practice, the donation is likely to be taxed in the following cases:

• when the donee declares it spontaneously for taxes.
• when the donee has been granted a new donation by the same donor or when he inherited it!
• when the donation has been brought to the attention of the tax authorities in response to a request for information or following a tax audit procedure.

Manual donation is taxed according to the same scale as the rights of donations. Therefore, it is possible to benefit from a tax exemption.

Note: If the beneficiary wishes to declare a donation to the tax authorities, the latter must use the cerfa form n°2735. The declaration must be made within one month of receiving the donation. The declaration is useful to obtain a certain date (the date of the declaration), mainly to take advantage of reductions every 15 years.

Indeed a parent can give up to 100,000 € to each of their children without paying any rights, every 15 years. This allowance is cumulative with another reduction of an amount of 31,865€, which is granted every 15 years for money donations, if the parent is under the age of 80 and the child is over 18. Beyond that, rights are to be paid.

What are the risks of manual donation?

• The manual donation must be revalued upon the donor’s death (unlike the shared donation).
• The donee is required to report for the purposes of equality between the heirs (whoever they may be). Therefore, manual donation isn’t a means through which an heir may actually benefit.
• Manual donation by definition is not accompanied by any useful clauses (right of return, lock-up agreement ...)
• Often the non-transparent nature of the manual donation can trigger family clashes: evidence to report, re-assessment...

Warning: During the tax reminder, the tax administration claims the payment for donation rights, late interest and penalties for all donations brought to its attention and which are less than 15 years old on the day of death for each beneficiary, heir of the deceased donor.

The same applies, in the caseof concealment of a donation, the donor's heirs may invoke an inheritance concealment. The heir guilty of receiving concealed goods risks losing his share of the estate.

Even the donee can pay the price in the event of a divorce because this donation is a separate property (under the community regime) but the latter has to prove the present. This is the reason why it’s always better to ask yourself "why to give" and "how to give". Whether or not the goal is to favor a child over others: Is this child single? Married? Under what regime? Does he cohabitate with someone? Is he in a civil partnership? Is it recommended to make a donation declaration?

Manual donation can be a quick, simple and at times a cost-effective process for passing on certain goods. However, if all of the legal, tax and family consequences are not examined, the gift can turn out to be a poisoned chalice for everyone.