You want to help a loved one, but you have already made a donation of € 100,000? Or are you willing to provide a larger amount?

The 3rd amending finance bill for 2020 brought a new tax innovation in order to revive the economy and the ecology. It proves to be a good initiative as, since July 15th, it has made it possible to benefit from an additional tax exemption for donations of up to € 100,000 per donee.

Codified in article 790 A bis of the General Tax Code, duty exemption can be granted to children, grandchildren or great-grandchildren. In the absence of descendants, the donor may do so for the benefit of a nephew or a niece.

However, to take advantage of this allowance, the donee will need to reinvest this amount along one of these three options:

• to finance the energy renovation work and expenditure on housing owned by the donee and allocated to his main dwelling.
• to finance the construction of its main residence. Please note, this exemption is only valid in the context of a construction, but not for an acquisition.
• to participate in the subscription to the initial capital or to the capital increases of a small business. Again, be careful because it has been subject to an exercise period for at least 5 years and the company must not have distributed profits. The donee must exercise his main professional activity there for a minimum period of three years from the subscription.

This exemption is applicable for each parent for the benefit of each child, but it is valid only once per donor regardless of the number of beneficiaries. For example, if you have two children, we won't be able to give € 100,000 to each, but only € 50,000 to each, or € 40,000 to one and € 60,000 to the other.

In order for the donee to benefit from this advantage, (s)he must imperatively realize the expenditure at the latest on the last day of the third month following the transfer of funds.

Don't worry, this € 100,000 can be combined with the € 100,000 reduction on donations between parents and children and the € 31,865 specific to donations of money for the benefit of adult children.

Watch out for the advantage of this new favor, which cannot be combined with all the other tax advantages already present. For example, it is not possible to accumulate until December 31, 2020 the tax credit for the ecological transition with this new exemption.

Do not waste time because this device is temporary and will end on June 30, 2021.

Do you want to benefit from this exemption now and would you like to know if it is advantageous for you? Do not hesitate to contact our Wealth A7 advisers who can analyze your situation and assist you in the accomplishment of your project.