Manual gifts involve an immediate and irrevocable transfer of movable assets from a donor to a donee, governed by mutual consent and legal capacity. Such gifts must comply with tax regulations, respecting hereditary reserves, and can include valuables, cash, and securities. Recipients must declare gifts to tax authorities, regardless of tax exemptions, and specific limits exist based on relationships. Informing heirs about manual gifts is crucial to prevent complications in estate distribution.
Understanding Manual Gifts
Defining a Manual Gift
A manual gift is essentially a contract where an individual, known as the donor, relinquishes ownership of one or more assets to another individual, referred to as the donee. This transfer is executed immediately and is irrevocable.
Characteristics of Manual Gifts
According to Article 757 of the General Tax Code, a manual gift pertains solely to movable property. It involves the tangible transfer of assets, and cannot include real estate, which requires a notarized deed for any donation.
The Irrevocability Factor
Like all forms of donations, a manual gift cannot be revoked once it has been accepted. Exceptions exist for future assets exchanged between spouses, as well as instances of fraud or acts of ingratitude from the donee.
When Can a Manual Gift Be Made?
Mutual Agreement is Key
The foundation of a manual gift lies in the mutual consent of both the donor and the donee. The donor must fully comprehend the implications of their action, particularly the irrevocable aspect of the gift. A clear intention to give without expecting something in return is essential.
The donee’s acceptance can be explicit, either verbally or in writing, or implicit, such as taking possession of the asset. Any absence of genuine consent or defects in consent can nullify the gift.
Legal Capacity Requirements
For a manual gift to hold validity, the donor must possess the legal capacity to transfer their assets. Individuals who are underage or under guardianship cannot make gifts without prior approval from a legal guardian or a court. The donor must have full ownership of the asset being gifted.
Similarly, the donee must be eligible to accept the gift. Minors or individuals under protection can accept gifts, but may need specific formalities, such as the involvement of a guardian.
Legality of the Gift’s Purpose
Both the asset being donated and the intent behind the gift must adhere to legal statutes. Manual gifts cannot be utilized for illegal activities or to obscure fraudulent actions. For instance, giving an asset to bypass inheritance rights or tax regulations is prohibited.
Potential Recipients of a Manual Gift
A manual gift can be made to anyone, as long as the rights of reserved heirs are honored. Here are some guidelines:
- To Children and Descendants: Gifts must follow the rules of hereditary reserve, ensuring that each child receives a minimum inheritance share. Excessive manual gifts may be contested during estate distribution.
- To Third Parties: Donations to non-relatives are allowed, but they must comply with the same tax and inheritance regulations, and can be challenged by heirs if they exceed certain limits.
Upholding Hereditary Reserve Principles
From a tax perspective, manual gifts that exceed customary values are subject to legal donation regulations and must respect the hereditary reserve, which guarantees a minimum inheritance share for reserved heirs such as children or a surviving spouse, in specific situations.
Eligible Assets for Manual Gifts
Donors can choose to make manual gifts of the following asset categories:
- Valuable items such as jewelry or artwork.
- Monetary sums, which can be provided in cash, via check, or through bank transfer.
- Securities, including stocks or bonds.
The transfer can occur directly or, in the case of money, through a bank transfer.
Limits on Manual Gifts in 2024
Even though a manual gift may not incur donation taxes due to specific exemptions, it must always be reported to tax authorities.
Declaration Requirements
Every manual gift must be declared by the recipient, even if the amount is under 15,000 euros and no donation tax is applicable. This declaration is crucial for maintaining gift traceability and avoiding potential disputes, especially among heirs.
Failure to declare may lead to tax penalties, even if no taxes are owed.
Exemptions and Limits
Manual gifts that remain below established exemption limits are not subject to taxation but must still be reported to allow the authorities to account for them.
Maximum Amounts for Manual Gifts
Dependence on Relationship
While there is no legal cap on the amount of a manual gift, taxation limits apply based on the relationship between the donor and the donee. For instance, each parent can gift up to 100,000 euros to each child every 15 years without incurring donation taxes.
Special Exemption for Family Cash Gifts
An additional exemption of 31,865 euros applies to cash gifts made within a family, provided the donor is under 80 years old and the recipient is either an adult or an emancipated minor. This exemption can be renewed every 15 years and combined with prior exemptions, allowing parents to gift a total of 131,865 euros to a child without incurring taxes every 15 years.
Executing a Manual Gift
Simplifying the Transfer Process
Making a manual gift can be a straightforward process. The donor simply needs to hand over the item to the donee without any requirement for formalizing the transfer.
Informing Heirs about the Manual Gift
While heirs are entitled to a portion of the donor’s estate, if the donor opts to make a manual gift, it is essential to keep them informed to avoid potential complications in estate distribution.