How Gifting Securities Works

Gifting financial securities means transferring ownership of shares, ETFs, mutual fund units or bonds to a beneficiary (child, grandchild, spouse or third party) without monetary consideration. From a legal standpoint, a gift of securities follows the same rules as any other gift in France: it must be made by notarial deed or, for listed securities, by a declared manual gift. A notarial deed is nonetheless recommended in all cases to secure the transaction and record the valuation date officially.

The securities are valued at the market price on the date of the gift. This value serves two purposes simultaneously: it is the taxable base for gift duties, and — crucially — it becomes the new tax cost basis for the recipient. If the donor holds shares purchased at €50 that are now worth €120, the €70 unrealised gain per share is never taxed in the donor’s hands. The recipient starts with a cost basis of €120 and will only be taxed on gains accruing after the gift date.

This “reset” of unrealised capital gains is one of the most significant tax advantages of gifting securities. It flows directly from Article 150-0 D of the French General Tax Code, which provides that capital gains are only taxed upon an arm’s-length disposal — a gratuitous transfer does not constitute a taxable disposal.

The Capital Gains Reset: An Advantage Few Investors Use

Consider a concrete example. A taxpayer holds a World ETF portfolio in a standard brokerage account (compte-titres ordinaire), built up gradually over 10 years at an average acquisition cost of €200,000. The portfolio is now worth €420,000, representing an unrealised gain of €220,000. If he were to sell the portfolio to fund a cash gift to his children, he would owe the 30% flat tax on €220,000, namely €66,000 in immediate tax, before even calculating gift duties on the cash transferred.

Instead, by gifting the securities directly to two children (€210,000 each), the unrealised gain is not taxed at all. Each child receives the securities with a cost basis of €210,000 (value at the gift date). The €100,000 parent-child allowance absorbs a large portion of the transfer: gift duties only apply to the slice above the allowance threshold.

This strategy is particularly compelling for highly appreciated brokerage portfolios. It does not apply to the PEA (tax-advantaged equity savings plan), whose favourable regime is attached to the account holder personally — a PEA cannot be gifted directly, and closing it triggers standard tax on accumulated gains. For life insurance contracts, the beneficiary clause provides a separate transmission mechanism outside ordinary gift rules.

Applicable Gift Tax Allowances in 2026

A gift of securities benefits from the same allowance regime as any direct-line gift. The main allowances applicable in 2026 are as follows, in accordance with Articles 779 et seq. of the French General Tax Code:

For a couple wishing to pass assets to two children, the total allowance capacity reaches 4 × €100,000 = €400,000 every 15 years, entirely free of gift duties. This transmission capacity is often underused, particularly for financial assets where parents think only of passing wealth through inheritance.

One point deserves particular attention: the 15-year clawback rule. Any gift made within the last 15 years is “recalled” upon death or a subsequent gift, reducing the available allowance accordingly. Acting now, in September 2026, starts a fresh 15-year clock running to 2041 — enabling a second wave of tax-free transfers in due course.

Gifting Securities in Dismembered Form: Bare Ownership and Usufruct

A gift of securities can be made in full ownership or in dismembered form. In a gift of bare ownership, the donor retains the usufruct of the securities — that is, the income they generate (dividends, coupons) — for life or for a fixed term. Upon the death of the usufructuary (or the expiry of the term for a temporary usufruct), the recipient acquires full ownership with no additional tax.

Dismemberment offers two benefits. First, the taxable base is reduced: gift duties apply only to the value of bare ownership, determined by a statutory scale (Article 669 of the French General Tax Code) based on the donor’s age. A donor aged 60 transfers bare ownership valued at 50% of full ownership: for securities worth €200,000, the taxable base is €100,000, effectively a 50% discount before applying the standard €100,000 allowances. Second, the donor retains the income (dividends, interest), preserving cash flows for retirement or ongoing needs.

Regarding management of the dismembered portfolio, particular attention must be paid to portfolio rebalancing. Selling a dismembered security requires the agreement of both parties (usufructuary and bare owner). The sale proceeds can be reinvested maintaining the dismemberment on the newly acquired securities, or subject to a quasi-usufruct agreement preserving the usufructuary’s management flexibility. This agreement must be drafted by a notary to be enforceable.

Strategy and Timeline: Actions to Take Before 31 December 2026

The September reéntree traditionally marks the start of wealth planning season. Gifts of securities must be structured in advance for three practical reasons: notarial appointments take four to eight weeks during peak periods, custodian banks have their own processing timelines for security transfers following a gift, and the value of the securities recorded in the notarial deed may fluctuate between the decision and execution dates.

The recommended approach involves four steps. Step one: carry out a portfolio review to identify securities with the highest unrealised gains, and check the status of available allowances (gifts made within the last 15 years). Step two: determine the legal structure (full ownership or dismemberment) based on the donor’s age and future income needs. Step three: instruct the notary and inform the custodian bank (transfers of securities following a gift require the notarial deed or declared manual gift depending on the case). Step four: consider the IFI (wealth tax) implications if the donor is subject to this tax — a gift of securities reduces the net taxable estate, provided the gift is genuine and not a sham arrangement.