French mother giving money to French son living in uk for UK house deposit

richweeks

Hi there,
I am a UK national and my partner is a french national who has indefinite leave to remain in the uk.  We are not married but have been living together in the UK for 5 years. 
We'd like to purchase a property together in the UK.  
My partner would like to receive the equivalent of £50,000 in euros from his mum in France for his share of the house deposit.
I'm unsure what the tax implications of this would be - especially considering the money is held in france so could be subject to french tax laws?  

I think the French mum is happy for this to be treated as either a gift or a loan - whichever attracts less tax.

Would you be able to provide guidance on what the best approach would be here?

Thank you very much for your help.

Jeremy535897

It appears French gift tax will apply. See:https://www.french-property.com/guides/france/finance-taxation/taxation/gifts-tax/rates

There would only be any UK tax liability on the gift if:

• your partner is non-UK domiciled for tax purposes and is subject to the remittance basis, and
• the money was paid into an account abroad in your partner's name which contained income and/or gains, and then the money was remitted here (in which case the remittance would be deemed to be a remittance of that income/gains)

richweeks

Thanks for this @Jeremy535897
What about if his mum loans him the money instead - in the form of a loan that is only repayable when the property is sold?

Jeremy535897

The same site I linked to earlier has some information:
https://www.french-property.com/guides/france/finance-taxation/taxation/gifts-tax

"Similarly, it is possible to grant a loan on generous terms rather than make a gift (and so avoid tax implications). Thus, the loan need not carry interest. Such arrangements are common for a prêt familial.

However, if you describe it as a 'loan', but there are no subsequent repayments of the loan, then it is likely to be considered to be a gift (prêt en donation déguisée).

In considering whether the act was a loan or a gift, the tax authority will have regard to all the factors - age of the parties, their personal income and wealth, amount of loan, terms of repayment, repayments made, verbal or written agreement. Strictly speaking, loans greater than €760 must be declared to the tax authority, but in the absence of such a declaration it is possible to provide other evidence of a loan."

I know nothing about French tax personally, and proper advice should be taken.