If you want to give money to your grandchildren without any formalities, nothing prevents you from doing so as long as the sums involved remain modest. When these monetary donations are more substantial, only what is called the “customary present” exempts you from declaring your donation to the tax authorities. The present of use, however, meets specific conditions. You also have the possibility of giving in particular large sums of money to your grandchildren with, of course, the obligation to inform the tax authorities, but without necessarily having to pay taxes.
What do we call the present of use, this possibility of giving money to one's grandchildren that it is not necessary to declare for taxes?
The customary present designates the gift of a sum of money (but it can also be gifts of jewellery, watches, paintings, cars, etc.), in your case to your grandchildren, on the occasion of a specific event. It must indeed be a special occasion necessarily linked to a family event such as for example a wedding, a baptism, a birthday, a successful exam, Christmas, etc. This present of use represents in a way a form of gift.
In addition to this condition of circumstance, a present of use must not be of a disproportionate value in relation to your assets, your income, your standard of living, your real estate, or your savings. It is most often estimated that the amount of money you can give to your grandchildren in this context should not exceed more than 2% of your assets, or even not more than 2.5% of your income.
The tax administration, in fact, has not defined specific maximum amounts for these types of family cash gifts. Given the elements of appreciation taken into account so that such a gift can be considered as a customary present and not be declared to the tax authorities, the sums of money paid to your grandchildren in this context must remain valid. 'a reasonable amount, under penalty of subsequent taxation.
The sums of money given to your grandchildren within the framework of a present of use are not to be declared to the taxes either by yourself, or by your beneficiary grandchildren, because they do not come within the framework of 'an estate.
Even if what is called the "manual donation" must be declared by your grandchildren who receive a sum of money from you to the tax authorities, in the month in which it is made through a specific tax declaration (n° 2731), it allows them to be exempt from gift and tax duties.
Indeed, your grandchildren who benefit from this type of gift of money benefit from a reduction of 31,865 euros from a tax point of view, to be deducted from the amount they have received from you. In other words, as a grandparent, you have the possibility of personally giving up to 31,865 euros to your grandchildren without them having to pay gift tax to the tax authorities. In addition, this type of donation is renewable every 15 years.
Once this allowance has been deducted, and if you give them a larger sum, the tax scale for gift duties to which your grandchildren may then be subject is 5% when the remaining sum is less than 8,072 euros. , 10% from 8,073 to 12,109 euros, or even up to 45% if it exceeds 1,805,677 euros.
Consequently, even if, in this context, your grandchildren must declare the money you give them for tax purposes, the margin is large since your donation can amount to nearly 32,000 euros without them being taxed.
Another type of donation, classified in the category of "family donations" and which must also be declared to the tax authorities even if it is just a formality, also allows you to give a maximum of 31,865 euros to your children. - children without being subject to gift tax. A possibility that can be combined with the manual gift described above. Giving money to your grandchildren in this way and not paying taxes is however subject to two conditions:as a donor, you must be under 80 years old and your beneficiary grandchildren must be over 18 years.
Finally, in terms of donating money, there is currently a possibility of giving up to 100,000 euros to your grandchildren while benefiting from a very interesting tax advantage, exemption from transfer duties, even if you However, you must notify the tax authorities. Please note:this measure is currently planned for sums of money paid since July 15, 2020 and before 1 st July 2021.
Another condition, the money you give in this context to your grandchildren must be used for them either to build their main residence, or to carry out energy work in their home eligible for the energy transition bonus, or either to create or develop a small business with less than 50 employees, in operation for less than 5 years, having not yet distributed profits and with a balance sheet of less than 10 million euros.
Even if you have to declare them, you can give your grandchildren up to 100,000 euros in the form of a check, bank transfer or cash. And they must use this amount as planned within 3 months of your donation.
