Inheritance tax can quickly reach a significant amount depending on the value of the inherited estate (with the exception of the surviving spouse or civil partner (PACS), who is exempt from inheritance tax, subject to certain conditions).
When a child of the deceased inherits, they benefit from an allowance of €100,000 on their share of the estate, provided that this allowance has not been fully used during the 15 years preceding the death (in particular through lifetime gifts made by the deceased).
This allowance is fully renewed every 15 years. Each child may benefit from this allowance per deceased parent / donor.
Applicable inheritance and gift tax scale
The progressive tax scale applicable to inheritance tax and gift tax is as follows:
(scale not reproduced)
Thus, for an inheritance share of €300,000, the amount of tax due would be €58,194.
However, by anticipating your succession through lifetime gifts, you can significantly reduce the inheritance tax payable by your child.
Practical example
If you make a gift of €100,000 to your child at the age of 50, then a second gift of €100,000 at the age of 65, and you pass away at 80 or later, the total amount of tax due will be €0 (for a total estate of €300,000).
Indeed:
- At the age of 50, you gift €100,000. As your child has not previously received any gifts, the €100,000 tax allowance (applicable to both gifts and inheritance) is fully offset against the gift. No gift tax is due.
- Fifteen years later, the allowance has been fully renewed and you decide to make another gift of €100,000. Once again, the €100,000 allowance is fully offset against the gift. No gift tax is due.
- At the age of 80 or later, upon death, the allowance has once again been fully renewed and is fully offset against the €100,000 inheritance share. No inheritance tax is due.
As a result, with the same total estate of €300,000, the total amount of gift and inheritance tax payable by your child is €0.
Cumulative allowances available
The €100,000 allowance may, where applicable, be combined with:
- The specific allowance for disabled persons (€159,325);
- The exemption for family gifts of cash, up to €31,865, subject to conditions.
Temporary exemption for family cash gifts (2025–2026)
The Finance Act of 14 February 2025 introduces a temporary exemption for cash gifts made within the family between 16 February 2025 and 31 December 2026, where such gifts are used for the acquisition of a dwelling or for energy renovation works.
This new exemption of €100,000 per donor, with an overall cap of €300,000 per recipient, applies to cash gifts made in favour of descendants (children, grandchildren, great-grandchildren, or, in the absence of descendants, nephews and nieces).
This exemption is subject to a double time-limit condition.
Sources:
Article 757 of the French General Tax Code (“FTC”)
Article 777 of the FTC
Article 790 A bis of the FTC
Article 790 G of the FTC
