At the start of the new year, we take a look at an important point in the Finance Act 2024: the reform of the restitution claim. What is the restitution claim? What is the impact of this change? Wealth A7 you explains all!

Why reform?

The senators who tabled this amendment felt that there was an inconsistency in that gift tax applied only to bare ownership, whereas the restitution claim concerned full ownership. They also criticised the use of this method for purely tax purposes.

The restitution claim and quasi-usufruct!

The restitution claim and quasi-usufruct are linked. The second is explained. Quasi-usufruct is in fact a usufruct that relates to consumable assets, i.e. assets that are consumed when they are used. This generally concerns financial assets. As in a more traditional dismemberment, there are two parties involved: the bare owner and the quasi-usufructuary. As the latter has the option of using up these funds when he dies, the value of the reconstituted full ownership is usually lower than the value at the time of the dismemberment. This difference in value gives rise to a restitution claim. It creates a debt on the estate for the benefit of the bare owner. Until now, this sum was deductible from the usufructuary's estate assets. This reduced the taxable amount of the estate and therefore reduced the tax payable.

What is the scope of this reform?

A number of situations may lead to the creation of this restitution claim. Most of them appear to fall outside the scope of the reform. This is the case for the following situations, unless the main objective is fiscal:

• The gift in dismemberment of a property or securities, followed by their sale. The proceeds of the sale would then be dismembered,
• The dismemberment of securities,
• Dismembered beneficiary clauses,
• Stripping generated by the legal rights of the surviving spouse or a gift between spouses.

It is above all the gift of a sum of money with reservation of usufruct that the senators wanted to counter. They felt that the aim was purely fiscal.

For the time being, the scope of application is relatively limited, but the legislation changes regularly. To avoid any unpleasant surprises and ensure that all inheritance arrangements are legal, the Wealth A7 advisers, specialists in Wealth Management, can provide you with support and advice - contact us!

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