Focus on the inheritance tax of non-residents in France

2 May 2022

Focus: Inheritance tax for non-residents

Since the abolition in 2007 of inheritance tax between spouses and those from a PACS, this whole issue has become less important for international buyers. The issue of inheritance tax in France still exists in the context of the transmission of assets to children or other heirs. However, as we are all mortal, even these relationships come to an end at some point, so the goal of inheritance planning is to minimize the liability of French inheritance tax for children and other heirs. This is something that all French homeowners need to consider. The location of the deceased’s last domicile and the situation of the heirs will determine whether tax is due in France.

Non-residents, Do you have to pay inheritance tax in France?

The taxation of international successions in France is provided for by article 750 Ter of the French General Tax Code. The following are subject to inheritance tax :
  • Movable and immovable property, owned directly or indirectly, located in France, when the deceased is not domiciled for tax purposes in France. Assets located in France are taxable in France for estate tax purposes even if their owner was a non-resident.
  • Movable and immovable property located in France or outside of France, received by the heir or legatee who has his or her tax residence in France.
 

For any information request, contact us ! We can put you in touch with a specialist in international transmissions.

However, this provision only applies when the heir has been domiciled for tax purposes in France for at least six years during the ten years preceding the year in which he receives the property. Thus, when the heir to an international estate is a French tax resident, the entire estate received by the heir is subject to French estate tax. In total, the inheritance tax will have to be paid to France when :
  • The deceased is a tax resident in France;
  • The heir is a resident of France for tax purposes;
  • The movable or immovable property transmitted is located in France
  It is also often the case that the estate is subject to both French inheritance tax and the inheritance tax of another country, in particular the country of the deceased’s last domicile. To avoid the risk of double taxation, and to determine the country in which the inheritance tax should be paid, many countries have signed tax treaties with France. It is important to note that the purpose of a tax treaty is to avoid double taxation of the same income, i.e. the case where the same person is taxed on the same income, the same fortune or the same succession or donation by more than one State.However, there are ways to avoid double taxation of your assets.