Our legal department is experienced at drafting and reviewing contracts and deeds of donation of goods of all kinds, such as cash and goods, companies, shares and equity participation, and property rights.
Under civil law, a donation is a gift made voluntarily and free of charge by one person to another person who accepts the gift. However, there are requirements for donations to be binding and enforceable. In some circumstances, donations can be revoked or reduced.
Revoking a donation:
There are several circumstances in which the law allows a donation to be revoked. For example, a gift made by a person who has no children or descendants may be revoked if it turns out that the donor has children after donating, even after death, or if a donor’s child was thought to be dead at the time of donation and turns out to be alive.
However, a more common reason for revoking a donation at the donor’s request is ingratitude, as illustrated in the following cases: (i) if the recipient of the donation violates the person, reputation or property of the donor; or (ii) the donor attributes to the donor an offence that gives rise to an ex-officio procedure or accusation, even if this is proven; unless the offence had been committed against the donor, his spouse or children under his authority; or (iii) if the recipient of the donation unduly refuses food to the donor.
Reducing a donation:
Donations can be reduced because no one can give or receive more than they can give or receive by will, and such donations are ruled invalid vis-a-vis the excess.
In such cases, where donations are not legal because of the liquid value of the donor’s assets at the time of death, they are reduced by the excess. However, this reduction does not mean that the amount cannot be updated during the donor’s life and that the donor will not be entitled to the proceeds.
Tax on donations:
Tax considerations are particularly important. Certain taxes accrue on donation transactions, for the donor regarding Inheritance and Donations Tax or Corporate Tax and for the recipient of the donation who may be liable for Personal Income Tax, Non-Resident Income Tax or Company Tax, depending on the circumstances.
Our tax department can advise you on the most advantageous way to carry out the donor’s requirements. We are familiar with the law regarding donations and the options open to our clients, such as conditional donations, modal donations, donations while reserving the right to availability, revocation, or reductions of donations.