French Inheritance Tax

by Sue Busby, France Legal

The situation differs significantly depending on whether or not you are fiscally domiciled in France.  Without going into the precise definition of fiscal domicile, if your main home is in France, then you will be considered as domiciled there for tax purposes.

Whether you are domiciled there or not, on your death, inheritance tax will be payable on the immoveable property you have there.  Immoveable property means houses and other permanent buildings.

If you are domiciled in France then inheritance tax will also be payable in France on your personal assets (moveable property such as furniture, shares, money in bank accounts), wherever they are situated. However, it will not be payable on immoveable property (buildings) situated in the UK.  The tax on this property will be payable in the UK.

If your main home is in the UK and you are not considered fiscally domiciled in France, then French succession law applies to immoveable property situated in France only.

How much tax is payable depends on how many heirs you have and what their relationship is to you. Inheritance tax is payable, not by the estate as such but by each beneficiary.  For example, there is an allowance between each parent and each child of 100,000 €.  Brothers and sisters have no allowance except in certain special circumstances when it is 15,697 €. Nephews and nieces have an allowance of 7,967 €.  Most other heirs have a negligible allowance and pay tax at a rate of 60%.  There is no inheritance tax between spouses and partners who have signed a civil partnership agreement.  The rates of tax payable after the allowance increases in bands from 5-60%.

Those with higher value properties or those who wish to leave property to someone who is not a close relative should seek legal and/or financial advice with a view to mitigating the situation.

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