Gift to a child: €100,000 allowance, 15-year retroactive period, and tax rates

Each parent can give €100,000 to each of their children before any inheritance tax is due. This allowance is calculated over 15 years: a subsequent gift to the same child replenishes the allowance once this period has elapsed. Beyond the allowance, inheritance tax is calculated according to a progressive scale for direct descendants, from 5 to 45 times the annual tax rate.

The rule applies equally to gifts and inheritances. A recent gift may disqualify the heir from the tax allowance upon death.

The €100,000 allowance for direct descendants

A tax allowance of €100,000 applies to direct line gifts made by the same donor to the same donee.

Two words are key in this sentence: "same donor" and "same recipient." The tax allowance is calculated for a donor-recipient pair. Each parent is a separate donor. Each child is a separate recipient.

The portion exceeding €100,000 is subject to taxes, according to the scale on this page.

The 15-year tax recap

The allowance is assessed on gifts made by the same donor to the same donee over a period of 15 years. It is then renewed.

In practice:

• If you give €100,000 to your son today, the tax allowance is fully used for that period.
• A new gift to the same child, during the 15-year period, does not benefit from a new tax allowance.
• After the 15-year period, the tax relief is available again.

It is the timing of your gifts that determines the available tax allowance, not just their amount.

In inheritance matters: a tax allowance per child, and the inclusion of gifts.

In direct line inheritance, the allowance is €100,000 per child. It applies upon the death of each of the two parents.

The tax credit also applies. The allowance is only granted if it has not been used by a gift in the 15 years preceding the death.

A gift made more than 15 years before death does not preclude the inheritance tax allowance. A gift made less than 15 years before death does preclude it, insofar as the allowance has already been used.

Gifts and inheritance: what's the same, what's different

The common element is the 15-year period. The gift uses this period to replenish the allowance. The inheritance uses it to verify whether the allowance has already been used.

The starting point differs. For a gift, the 15-year period is calculated between gifts from the same donor to the same recipient. For an inheritance, it is calculated backwards from the date of death.

The scale of rights in direct line

The tax scale applies to the taxable portion, after deductions. It is the same for gifts and inheritances, according to the official websites consulted.

The official websites present the thresholds slightly differently: for example, €8,072 on some, €8,073 on others. It is the same scale. The table above reproduces the presentation used by the tax authorities.

Each bracket is taxed at its own rate. The rate of 20 % therefore only applies to the portion between €15,932 and €552,324, not to the entire amount.

Three books to avoid

1. Apply 20 % to the entire amount. Each bracket is taxed at its own rate. The 20 % rate only applies to the portion between €15,932 and €552,324.
2. Consider the allowance as an overall ceiling per child. The gift tax allowance is renewed after the 15-year period. It is not exhausted once and for all.
3. Forget yesterday's gift at the time of inheritance. A gift made less than 15 years before death may have used up the tax allowance that the heir was hoping for.

Numerical example (fictitious profile)

Situation. A 58-year-old father wants to give €300,000 to his daughter as a gift. He has never made a gift to his daughter before.

Issue. A single gift of €300,000 uses the €100,000 allowance only once. The taxable portion is €200,000.

Strategy. The firm is working with the father to determine a phased distribution of the gift: €150,000 now, and another €150,000 after the 15-year period has elapsed. Each gift replenishes the €100,000 tax allowance.

Result. Each gift of €150,000 leaves a taxable portion of €50,000, amounting to €8,194.35 in taxes. For the two gifts combined: €16,388.70. Compared to €38,194.35 for a single gift, the difference is €21,805.65.

This calculation assumes the allowance and tax brackets remain unchanged, the same daughter is the recipient of the gift, no other gifts are made between the father and daughter, and a 15-year period is observed. If the father were to die before the end of this period, the tax would be applied to the estate. This scenario is hypothetical. The figures illustrate the calculation and do not predict any specific outcome for your family.

What this page does not cover

This page deals with direct inheritance from a parent to a child. It does not address other types of kinship, nor cases where the donor or heir resides abroad. These situations are governed by specific rules, which must be examined on a case-by-case basis.

What changes depending on your situation

• The number of children and the amount to be transferred.
• The date and amount of your previous gifts.
• The donor's age and plans, with regard to the 15-year period.
• The nature of the donated goods.
• The residence of the donor and the donee.

No results are promised: the calculation is redone on your file.