The january 07, 2022

We are going here to consider two bills that have already been tabled in the National Assembly.

These bills relate to the exemption from transfer duties on the transmission of family businesses and the abolition of inheritance and gift taxes and thus promote the transmission of family assets.

Let’s look together at companies in terms of figures and according to a study by the OECD (the International Organization for Economic Studies), in terms of tax pressure, France is in pole position, well ahead of the forty member states of this organization.

Among the common taxes and current taxes, the taxation of transfer law is particularly heavy compared to our European neighbors. Indeed, while in France this rate varies around 5.8%, there is a rate of 2% for Austria or even in Germany with a rate which oscillates between 0 and 3%.

The health crisis has led to a consequent weakening of the development of our territory. Reforming the taxation of transfer duties both for consideration and free of charge is becoming a necessity to give a boost to our economy.

Among the companies present in the territory, family businesses alone represent 83% and only 12% of them are the subject of a transfer. This situation can easily be explained by the weight imposed by compulsory levies.

With a tax of 5.8%, which is one of the heaviest in Europe, the latter does not facilitate investment between regions, it is even quite the opposite.
The coming quarters will be marked by economic recovery. The latter will be accompanied by a reduction in the taxation of transfer duties.

What about gift and inheritance tax for family assets?

Indeed and until now, France is the country that taxes the most heavily in terms of inheritance as far as Europe is concerned and is in third position on the planet.

To give you an idea, here are some concrete cases of the current provisions:

Today in France, the direct line allowance is 100,000 euros compared to 1 million euros in Italy or 11,200,000 dollars, or 1,061,778 euros, for the United States.

With regard to donations, an allowance of 100,000 euros is granted every 15 years and this, in a direct line, and "only" 31,865 euros between grandparents and grandchildren.

Faced with the high rates of Free Transfer Taxes (DMTG), many French people are dissuaded from giving their loved ones the benefit of donations. However, it is the "youngest" who are the most inclined to undertake and invest. On the taxation side, the same observation is made, upstream transmission is not valued. The strongest investment capacities are found in the hands of our seniors who have less appetite for them. The health crisis has once again accentuated this effect. In a desire to stimulate consumption and thus promote the economic recovery of our country, the reform of the DMGT tariff regime aims to drastically simplify the scale applied to direct line transmissions.

What the proposed law provides:

For direct line successions, no taxation would be applied to all estate assets up to 5 million euros. Beyond this amount, the rate would be 20% per unit up to 5 million euros, then 30% beyond that. In conclusion, inheritance tax would therefore only target the largest estates.

With regard to donations in the direct line and between spouses, this scale would also be retained, after application of a reduction of 5 million euros per donee.

The amount of the allowance applied for a donation between grandparents and grandchildren would be valued from €31,865 to €150,000.

It should be noted, however, that these measures were not thought out, not without an intention as a counterpart that we would find mainly in the creation of an additional tax to the value added tax.

In recent months, the taxation of gifts and inheritances has been at the heart of many debates. This is why your Cabinet Wealth A7 is always kept informed of the news in order to best respond to your daily life.

In a changing world, Wealth A7 is here to bring your desires to life.


Article by : Noémie MARZLOFF

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