In France, inheritance tax is known as “droits de succession” and is payable by the heirs of the deceased. The amount of tax payable depends on several factors, including the estate’s value and the relationship between the deceased and the heirs.
The French tax system for inheritance is complex and can be difficult to navigate. Many exemptions and reliefs are available, depending on the estate’s circumstances and the heirs. It is important to seek professional advice when dealing with inheritance tax in France, as the rules and regulations can be confusing, and mistakes can be costly.
Harrison Brook France is here for you.
Understanding Inheritance Tax in France
Inheritance tax in France, also known as succession tax, is a tax on the transfer of assets from a deceased person to their heirs. It is important to note that inheritance tax is separate from income tax and capital gains tax.
The amount of inheritance tax owed by the heirs depends on their relationship to the deceased person and the value of the assets inherited. In general, the closer the relationship, the lower the tax rate. For example, spouses and children are subject to lower tax rates than distant relatives or non-relatives.
How is Inheritance Tax Calculated in France?
The calculation of inheritance tax in France involves several key factors:
Tax Allowance: The tax allowance is a deduction applied to the value of the inheritance before calculating the tax. The amount of the tax allowance varies based on the family relationship between the deceased and the heir.
- Children and parents have a tax allowance of 100,000 euros each. This means that the first 100,000 euros inherited by each child or parent is exempt from inheritance tax.
- Grandchildren and great-grandchildren, on the other hand, have a lower tax allowance of 1,594 euros.
Direct Succession Tax Rate: The applicable tax rate in the case of direct succession, where the inheritance passes directly to children, parents, or grandparents, is determined based on the value of the inheritance. Therefore, the tax rates for direct succession range from 5% to 45%. As the value of the inheritance increases, the corresponding tax rate also increases.
Indirect Succession Tax Rate: In the case of indirect inheritance, where the heirs are family members beyond the fourth degree or unrelated individuals, the tax rate is higher. In these cases, the tax rate increases to 60% of the net taxable value.
Inheritance Tax Planning
Inheritance tax planning in France can be complex. Therefore, to navigate the intricacies of the tax system, it’s essential to work with a French tax specialist. They understand the nuances of French tax laws and can help you develop an effective plan.
At Harrison Brook, we collaborate closely with experienced French tax specialists. Consequently, we can tap into their valuable insights and expertise. By seamlessly combining our knowledge and resources, we provide tailored solutions that precisely meet your specific needs.
Our inheritance tax planning services encompass various aspects, including:
Understanding Your Goals
We take the time to understand your goals and priorities. Whether you seek to minimise the tax burden on your heirs, protect family wealth, or ensure a smooth transition of assets, we tailor our advice to align with your objectives.
Tax Optimisation Strategies
At Harrison Brook, we employ sophisticated tax optimisation strategies within the boundaries of French tax regulations. Moreover, our experts can advise you on leveraging tax allowances, utilising exemptions, and exploring tax-efficient wealth transfer options. In short, we dedicate ourselves to maximising your tax benefits while ensuring compliance with the applicable laws.
Estate Planning Structures
We can assist you in establishing estate planning structures, such as trusts or family holding companies, that align with your goals and help manage your assets effectively. These structures can provide flexibility, protection, and tax benefits in the context of inheritance tax planning.
By working closely with our team of professionals and highly knowledgeable French tax specialists, you gain confidence. They help you navigate the complexities of French tax laws with ease. Additionally, we offer personalized advice, comprehensive solutions, and ongoing support to ensure you are well-informed when making crucial decisions about your estate and legacy.