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France imposes a tax on large monetary gifts, and if you’re transferring money to someone who resides there they’ll be responsible for filing. The US also imposes a gift tax on the sender, but you won’t have to pay unless you’ve gifted more than $12.06 million in your lifetime.
Gift taxes are just one part of France’s complicated inheritance laws, which are generally based on your relationship to the beneficiary of your gifts of cash or property.
It’s possible for your French family to receive one-off gifts of cash tax-free. These amounts range from €159,325 for gifts to a family member with a disability to €5,310 for a gift to a great-grandchild. Each child has a tax-free allowance of €100,00 on inheritance from their parents and siblings have a tax-free limit of €15,932.
Given the complexity of these laws that are deeply entrenched in legal requirements and exclusions, your loved ones will benefit from an expert in French laws when receiving large amounts of cash. To find out exactly how much you’ll need to pay in taxes, check the French tax code.
If you’re sending money for a purchase, the recipient will need to pay value-added tax (VAT) to the French government.
If the money is for a loan, things get much more complicated, and whether your recipient needs to pay taxes depends on factors such as the interest rate, purpose of the loan and your relationship to the borrower. It would be a good idea to consult an expert in French tax laws if you’re loaning someone a large sum of money from overseas.
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Just as US citizens are required to submit annual tax returns, French citizens are required to submit a déclaration des revenues each year. If your recipient fails to declare a large remittance on their tax returns, they could be on the hook for stiff financial penalties equal to 5% or more of the remittance amount. If the government determines that they’ve willfully ignored the law, tax penalties can soar to a severe 50% or more.
French banks are required to record the source of large transfers and report any suspicious deposits to the government. Encourage your family and friends in France to declare any large remittance on their general tax returns.
Possibly. If you’re sending a gift of more than $15,000, conducting a business transaction of more than $10,000 or transferring the money to a French account in your name, you’ll likely need to file with the IRS.
The US government monitors transactions into and out of the country. With more focused attention on money transfers since 9/11, if you fail to report a remittance of $10,000 or more, it will likely be discovered.
By law, banks report all large cash transactions and any amount that raises an eyebrow. Money transfer businesses, which often solely send money between countries, sometimes have reporting thresholds as low as $1,000.
Sending a lot of money out of the country? Know what the IRS expects of you.
There’s no legal limit to how much you can send to France. However, some transfer providers will impose their own limits. If you’re planning a large transfer, use a provider with no cap, such as Xe.
Depending on which provider you choose, your recipient can have the money deposited directly into their bank account or mobile wallet or they can pick up the cash in person.
If picking up the money in person, your recipient may need to submit a government-issued ID or a transaction confirmation number. Confirm with your bank or independent money transfer provider the exact information your friends and family might need to receive your funds before sending.
If you’re transferring over $10,000 to France, you’ll likely have to let the IRS know, even if you don’t owe any taxes. And your recipient may have to pay a tax in France, though the exact amount will depend on how much you’re sending and how you’re related to them.
As with all international money transfers, be wary of potential fraud and only send money to people you know. Using a reputable provider can safeguard you from potential scams.