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Money donations from the UK : how to cross the fiscal channel.

Money donations from the UK : how to cross the fiscal channel.

Publié le : 04/03/2024 04 mars mars 03 2024
Immobilier

What happens if you use money given to you in the UK, to buy estate in France ? If you are a british citizen, but a french fiscal resident, you may find yourself in a tough position : the notaire will have to establish the origin of the funds, and the fiscal administration may want to have its share.

You may have paid your taxes in full in the UK, but since France has not signed a fiscal convention with Britain, the french administration does not recognize the british taxation.

In the absence of a bilateral convention, it is the article 750ter of the « code général des impôts » that will prevail as far as the french law is concerned. This article states that when the donor is a not a french fiscal resident, but that the donee is, and has been for at least 6 years during the last 10 years, all property donated is subject to being taxed in France.

Is it necessary to declare in France any donation concluded abroad ? Yes, unless you don’t mind a tax audit and a 10% penalty.

What will be the fiscal treatment of said donation ? For a sum of money donated between parent and child, there is a tax deduction of 100 000€ per parent and per child, every 15 years. To which you can add, if your parents are under 80, a specific tax deduction aimed at money donations, of 31 865€ per parent and per child, every 15 years.

So, each parent can transmit up to 131 865€ tax free every 15 years per child. If the sums donated exceed this ceiling, then the tax rates are as follow :
 
Until 8 072 € 5 %
From 8 073 € to 12 109 € 10 %
From 12 110 € to 15 932 € 15 %
From 15 933 € to 552 324 € 20 %
From 552 325 € to 902 838  30 %
From 902 839 € to 1 805 677 €        40 %
Over 1 805 677 € 45 %

Are you going to pay twice ? No, to balance this rule, and avoid the risk of a double taxation, the taxes already paid in Britain (for movable and immovable property) will be deducted.

How to declare a familial donation that happened abroad ? It’s the cerfa 2735 form, that has to be adressed to the « recette des impôts » of your french residency, accompanied by the applicable taxes.

I’ve done the math, and I don’t own any tax, is it still worth it to declare ? Even in the case of a tax free donation, it is important to declare it, as is serves as proof of the fiscal exonerations you wish to benefit from. It also prevents the administration to later impose on you more defavorable conditions, were there to be a tax reform, as it often happens in France.

When thinking about your next french estate acquisition, feel free to ask your notaire about the best way to secure your fiscal position, it’s important !
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