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French inheritance tax
For expats living in France, the laws of inheritance depend on many factors. Marriage contracts, official domicile, number of beneficiaries, etc. A minefield that we tend not to think about until it's too late. Here are a few pointers and some links to more detailed information.
We have been recommended The Homes Overseas Website which says the following about French Inheritance tax:
French succession tax is a tax on lifetime gifts as wells as on inheritances. The tax is payable by the recipient depending on the value received and the degree of kinship with the deceased or donor.
If the donor or deceased is resident in France, French succession tax will be payable on their worldwide assets.
French assets are always liable to French succession tax regardless of where the deceased or recipient is resident.
In addition, succession tax is payable by a French resident who receives a gift or inheritance and who has been resident in France for at least 6 out of the 10 previous tax years. However, under the special UK/France Inheritance Tax Treaty, inheritances (not gifts) from a UK domicile to a French resident recipient are not liable to succession tax in France, even where the recipient has been resident in France for more than six years. The Treaty also stipulates that if you die a resident of France and have any assets based in the UK they will be subject to UK inheritance tax, as well as French inheritance tax, although any inheritance tax paid in the UK will be credited against the French tax due.
Inheritances between spouses are no longer liable to French succession tax. This exemption also extends to registered PACS partners in France. However, gifts between spouses and PACS partners remain taxable after an allowance of €76,988.
Children are entitled to an allowance of €151,950 (for 2008) each, and the tax rates on the excess range from 5% to 40%. The top rate of 40% is only payable where the amount taxable exceeds €1.7m, therefore most beneficiaries will pay tax at a much lower rate. As each beneficiary has their own separate allowance and rate bands, succession tax can be substantially reduced if there are several beneficiaries.
For the full text and more precise information about inheritance tax and the rates for items such as lifetime gifts and Usufruit, etc check homesoverseas.co.uk/french-succession-tax
Other useful links
Save French Tax Guidance on all tax issues for expats in France
French Property Services and Information Tax and the restrictions
French Entree The latest tax news
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