Roche & Cie

Focus on the inheritance tax of non-residents in France

28 Feb 2017

Since the abolition in 2007 of the tax between couples and those in a French civil partnership, this whole issue has become less important to international buyers.

However, as we are all mortal, even these relationships come to an end at some point, so inheritance planning is to minimise liability to French inheritance tax for children and other inheritors remains something all owners of French property need to consider.

The liability to the French inheritance tax depends, first of all, on the residence status of the deceased and, after, on that of the beneficiary.

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

The taxation in France of international successions or inheritances is provided for in Article 750 Ter of the French General Tax Code.

Under the terms of most tax treaties between France and other countries, only real estate in France is subject to French inheritance tax.

The following shall be subject to the transfer duties free of charge:

– Movable and immovable property, whether owned directly or indirectly, situated in France, where the deceased is not a fiscal resident in France. Property situated in France and owned by a non-resident may be taxed in France in respect of inheritance tax.

– Movable and immovable property situated in France or outside France, received by the heir or legatee who has his fiscal domicile in France. However, this provision applies only when the heir has had his fiscal domicile in France for at least six years during the last ten years preceding that in which he receives the property. Thus, where the heir of an international succession is a tax resident in France, the entire estate received by the latter is subject to French inheritance tax.

In general, inheritance taxes will have to be paid to France if:

  • The deceased is a tax resident in France;
  • The heir is a tax resident in France;
  • The movable or immovable property transmitted is in France;

You will agree that the definition of the person liable for inheritance tax in France is very broad. This situation regularly results in double taxation; In France and in the country of the deceased or heir.

To avoid the risk of double taxation, and to determine the country where inheritance taxes should be paid, many countries have signed tax treaties with France.

(Contact us for a specific tax treaty)

It is important to note that the objective of a tax treaty is to avoid the double taxation of the same income, that is to say, where the same person is taxable in respect of the same income, fortune or succession or gift by more than one State.

In a country where there is no inheritance tax (for example Portugal), the tax treaty can not be applied and inheritance taxes will be payable in France.

However, there are mechanisms to avoid double taxation of your assets.

For more information, contact our specialist : Muriel Brault.

Cabinet Roche & Cie, Chartered accountant in Lyon, France
Expert in Real Estate and Taxation of Non-Résidents in France