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The less we possess, the more we can give’ said Mother Theresa: this thought, however right it may be in the spiritual realm, is contradicted by the assessment, in the temporal realm, that the tax authorities make of the gift of use. Noël provides an opportunity to point out that administrative doctrine¹ allows for the non-application of transfer duties ‘to manual gifts having the character of gifts of use within the meaning of article 852 of the Civil Code. This article (…) specifies that the nature of a gift of use is assessed at the date on which it is made, and taking into account the wealth of the person making the gift.” Thus, to qualify as a gift of use, a manual gift must be linked to an “event” and not be “disproportionate” in relation to the wealth of the person making the gift. With two such subjective criteria, it is easy to imagine the embarrassment faced by the courts, which are more often involved in civil than tax disputes, when it comes to separating the wheat from the chaff.

As far as the event is concerned, case law has been able to classify gifts as customary presents for weddings, birthdays, anniversaries, academic or social successes, end-of-year celebrations or religious holidays². As Guy Venandet pointed out almost 30 years ago³, there is no objective criterion that can infallibly pinpoint the event that gives rise to the gift: it varies according to time, region, world, family and belief. As sociologists, we therefore need to assess whether Valentine’s Day, a promotion, a religious ceremony or the award of a diploma are events on which society recognises that it is customary for close friends and family to express their gratitude or affection. Are today’s customs the same as they were 30 years ago? It’s doubtful…

However, the existence of a custom is hardly sufficient: the value of the present must not be significant for the person who is relinquishing it. It is no longer as a sociologist but as an accountant that the judge must assess, on a case-by-case basis, whether or not the gift is modest in relation to the donor’s resources. And, contrary to what one might imagine, the task is just as difficult. Judges sometimes adopt a dynamic approach, comparing the value of the gift with the income of the donor. Thus, in litigation, the tax authorities, who have always – understandably! – refused to formalise a rule of proportionality, was able to argue that the yellow line between modesty and impoverishment could be drawn around 2.5% of the donor’s annual income⁴, based on a Court of Appeal decision⁵. Yet gifts representing more than half the donor’s annual income could be deemed modest⁶! It will be clear: it is futile to try to draw arithmetical lessons from case law. It should be noted, however, that judges most often seem to favour a static approach, comparing the value of the gift with that of the donor’s wealth. For example, several donations made on the same day were considered modest, even though they represented 2.44% of the disposant⁷’s wealth.

In this festive season, it’s worth remembering that for generosity to be expressed tax-free, it’s all a matter of context…

1 – RES n° 2013/05 (ENR): BOI-ENR-DMTG-20-10-20-10, § 260.

2 – See I. Najjar, Rép. civ Dalloz, V° Donations, p. 18.

3 – note under Cass. 1re civ. 6 Dec. 1988: JCP N 1989, II, p. 305 et seq., spec. p. 307.

4 – Daniel FAUCHER, ‘Présents d’usages non imposables’, La Semaine Juridique Notariale et Immobilière no. 51, 20 December 2002, 1724.

5 – Bordeaux Court of Appeal, 1st ch. 9 April 1987, no. 3515/85.

6 – Nancy Court of Appeal, 5 February 2007, no. 04/01431 and confirmed by Civ 1, 15 May 2008, no. 07-13.947.

Bertrand Lacombe

Lawyer at the Court, Lacombe Avocats

Experts de premier plan en droit fiscal