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Inheritance and estate taxes in France

Updated: Sep 14, 2022

When does the French legislation on inheritance and the tax on inheritance in France apply to your property and possessions? This guide explains the inheritance tax rates in France, in addition to the specific restrictions that apply to non-residents and foreigners.


Those who become official residents of France, relocate to France to retire there, or purchase property in France are encouraged to give some thought to whether or not French inheritance and succession rules apply to their holdings. In some circumstances, non-residents and non-citizens of France have the option of using the law of their home country; but, under French succession law, there may be certain limitations on how assets located in France may be distributed among heirs.


French inheritance law and succession rules


The French civil code is the source of French inheritance law, which is structured on a residence-based hierarchy when it comes to legal matters about inheritance. This entails that French inheritance law applies to all inhabitants of France, irrespective of their nationality.


The direct line of succession, which includes children, grandchildren, and parents, is safeguarded by the use of forced heirship regulations. Historically, the purpose of this was to safeguard the family by preventing, for instance, an unscrupulous third party from pressuring an old person to disinherit members of the family.


However, regardless of whether or not the decedent left a will, required heirship regulations dictate that a certain part of the estate must be distributed to the decedent's children or spouse. After this, the leftovers are free to be dispersed whatever a French will directs.


Children can renounce their claim to an inheritance in France so long as the process is carried out in the presence of two notaries. After the death of the parent, this privilege cannot be removed.


The following is a breakdown of the amount that must be put aside as a reserve by French inheritance law:


● If there is just one kid, that child is entitled to fifty percent of the inheritance.

● They share 66.6% of the estate between them because they have two children.

● When there are three or more children, they are each entitled to a share of 75% of the inheritance.

● If there are no children, the surviving husband is entitled to a share of the inheritance equal to 25%

.

For a spouse to lawfully receive any of the deceased person's inheritance, the pair must be married at the time of death.


Unfortunately, a surviving spouse in France who is either in an unmarried relationship, a civil union or who has been divorced will not have a preset legal claim to a portion of the inheritance. Survivors of civil unions, on the other hand, have the legal right to continue living in the same house as their family for up to a year following the death of their spouse.


Inheritance law on pensions in France


When it comes to pensions, inheritance law is difficult to understand since it relies on a variety of different circumstances. If the dead person was getting a pension from another EU (or non-EU) nation, then this situation gets even more problematic.


If a French pension is left behind by a dead person, it will not be automatically inherited by the surviving spouse or ex-spouse if that person is under the age of 55 and does not meet specific income requirements.


It is possible to create a QROPS trust with children as beneficiaries if you choose to transfer your UK pension to a qualifying recognized overseas pension plan (QROPS) while you are living in France. This option is available to you if you decide to transfer your pension. However, if the dead person has been a resident of France for at least ten years before the date of their death, then their pension will become eligible for French succession tax.


If you want to avoid making errors that may wind up costing you a lot of money, you must seek the guidance of an experienced tax specialist.


French inheritance tax


You need to make it clear in a will or a separate declaration if you want the inheritance rules of your country of nationality to be applied if you are an expat living in France who is a citizen of the EU. If you want these laws to apply, you need to make it clear that you want them to. These laws will therefore be enforced in general as long as they do not go against the general public policy of the area.


The following items about your inheritance are exempt from the regulations of the EU:


● Inheritance taxes

● Your civic status

● The property regime of your marriage or domestic partnership refers to how your assets are to be shared if one of the parties dies.

● Matters concerning companies


When you become an official resident of France, the law governing your inheritance in France may apply to all of your assets, no matter where they are located in the globe, except any real estate you may possess abroad. This is because real estate located in a foreign country is often subject to the inheritance rules of the nation in which it is located.


The deceased's connection to the heirs determines how much of an inheritance tax they must pay. The French are worried about carrying life insurance in France, also known as assurance décès, in part because of the inheritance tax. This is especially the case if the bequest will go to a non-blood relative or a distant cousin. You may purchase insurance for different members of your family, including your children, your friends, and even your lover.


The rates and exemptions for the French inheritance tax


The following table details the current rates and allowances applicable to the French inheritance tax:


Spouses: In France, couples who are legally married or who are partners in a civil relationship are no longer required to pay the inheritance tax.


Parents, children, and grandchildren


● Tax-free allowance: €100,000

● 5% tax up to €8,072

● 10% on €8,072–€12,109

● 15% on €12,109–€15,932

● 20% on €15,932–€552,324

● 30% on €552,324–€902,838

● 40% on €902,838–€1,805,677

● 45% over €1,805,677


Brothers and sisters


● Tax-free allowance: €15,932

● 35% tax up to €24,430

● 45% on more than 24,430


Other relatives up to the fourth degree


● Tax-free allowance: €7,967

● 55% flat-rate tax


Remote relatives and other beneficiaries


● Tax-free allowance: €1,594 (€159,325 if disabled)

● 60% flat-rate tax


The laws of intestacy in France are put into effect whenever a person passes away without leaving a will. This indicates that the surviving children and spouse will get their appropriate share of the inheritance after its distribution.


The life interest (usufruit) or outright ownership of the spouse's share of the French property (at a minimum of 25 percent) is up for the spouse's choice in the French property transaction (the right to use it throughout their lifetime). When this occurs, ownership of the whole estate is distributed equally to all of the children.


Estate tax in France


According to French property law, ownership is recognized by the person who is stated on the title documents. This implies that after purchasing a home in France, you will be required to register the property to have it count against your estate.


The marital regime that a couple chooses while getting married in France will determine which types of inheritance rights are available to the spouse under French law.


● If the marital regime is en indivision, which means that any property that was purchased during the marriage is owned jointly by both partners, then the surviving spouse is entitled to keep their half of the property, while the other half becomes part of the estate of the deceased person and is subject to the rules regarding forced heirship.

● Any property that is held by both parties is regarded to be part of the community if the couple chooses to have a communauté universelle marriage. This indicates that the surviving spouse is the only owner of the property and that compelled heirship does not apply unless the dead had children from a prior marriage. In this case, the surviving spouse is the single owner of the property.

● You also have the option of purchasing real estate in France en tontine, which indicates that the whole property will be given to the partner who is still alive after the transaction.


By creating a will in French, a person can give the balance of their fortune to anyone they want, regardless of the limits on inheritance outlined above under French law.


According to French inheritance law, a kid under the age of 18 who inherits property must not have any obligations attached to the property at the time of the inheritance (including mortgage reimbursements).


In France, the inheritance tax on real estate often falls under one of the standard tax brackets, which may be seen above. The value of the property and the recipient's connection to the dead person will both play a role in determining the tax allowance that may be claimed.


Paying inheritance tax in France


When a person dies away, it may take some time for financial institutions, insurance companies, and government organizations to determine how much money they had.


You have a period of six months to make a statement to the relevant tax authorities; but, in most cases, you will be able to seek an extension if the dead person residing in a country other than France. After then, the government can challenge the figures that were used in the declaration and the computation of the tax.


If they don't, you need to make the tax payment as soon as you can. Depending on your connection to the person who passed away, the tax authorities may enable you to delay making payments for a period of five to ten years. If more than half of the inheritance is in liquid assets (cash, for example), you have to make the tax payment within the first six months after receiving it.


If French inheritance law applies to your estate and you are a resident of France, then French inheritance tax will be charged on all of your assets, no matter where in the globe they are located. If you are not a resident of France, the tax won't apply to any of the possessions that you have in France.


This may, under some circumstances, result in a situation known as "double taxation," which is when an asset is subject to taxes in two distinct nations. To avoid the burden of paying taxes twice, France has negotiated tax treaties with several nations, notably the United Kingdom and the United States. In addition, it is possible to contest double taxation in the country of France.


Employing a qualified estate planner who is certified in your state to advise you through the process is a sound option no matter what your circumstances may be.


Reducing your inheritance tax in France


Once every 15 years, you are permitted to make gifts that are exempt from taxation up to the set tax limit. The 15-year window must have passed for the gift to be removed from the estate of the person who gave it.


To put it another way, if you give someone an asset that is within the scope of the tax-free allowance and then pass away before the 15-year term has elapsed, the value of the item will be included in the value of your estate to calculate the French inheritance tax. There is a possibility that some additional tax expenditures may be paid.


The circumstances of your life and your connection to the person who passed away will determine whether or not you are eligible for a reduction in the inheritance tax that you must pay. Therefore, do yourself a favor and hire a competent estate planner who can guide you through the process and help you reduce the amount of taxes you have to pay.


Useful resources


● Republique Francaise tax administration website (in French)

● The official website of France's notaries, Notaires de France (in French)


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