, last updated - Taxation in France

Tax Inheritance in France

Inheritance Tax France

Tax inheritance in France, also known as the French succession tax or droits de succession, is a topic of significant importance for individuals residing or inheriting assets in France. In this blog, we will explore the key aspects of tax inheritance in France, shedding light on its implications, differences from the UK system, and essential considerations. Understanding these intricacies will help you navigate the complexities of French inheritance tax law more effectively.

Understanding Tax Inheritance in France

Tax inheritance in France is payable by individuals who inherit assets or receive gifts from French residents. This tax is calculated on a progressive banding scale, unlike the flat rate applied in the UK. Being aware of the factors that determine your residency status for tax purposes is crucial. Spending a significant amount of time in France, having family residing in France, working or earning income from French sources, or holding substantial assets in France can lead to being considered a French resident for tax purposes.

Key Differences from UK Inheritance Tax

Tax inheritance in France differs from the UK’s inheritance tax system in several significant ways. Firstly, spouses and civil partners in France have the right to inherit their share of the estate tax-free, regardless of the estate’s size. Unlike the UK, France imposes gift tax on lifetime gifts, potentially resulting in higher tax liabilities. Additionally, French inheritance law treats assets differently based on the relationship between the inheritor and the deceased, which affects the tax calculation.

The French Succession Tax Rates

The French taxation regime employs a progressive banding system, granting each beneficiary a personal allowance. Spouses and civil partners inherit everything tax-free, while children enjoy a personal allowance of €100,000. However, other relatives face different tax rates. For instance, the tax-free allowance for siblings is €15,932, and the tax rates for amounts above this level are 35% or 45%. On the other hand, the tax rates for nephews and nieces are even higher, taxing amounts above the meager tax-free allowance of €7,967 at 55%. Non-relatives receive a €1,594 tax-free allowance, with the remainder taxed at 60%.

Considerations for Expats and Non-Residents

For expats living in France, understanding tax inheritance rules is essential. France’s forced heirship law mandates that you leave a significant share of your estate to your children, with proportions varying based on the number of children. Creating a will is crucial to ensure the distribution of your assets as desired and avoid potential complications. It’s worth noting that the UK and France have a double tax treaty to prevent incorrect taxation in both countries, including inheritance tax. Non-residents with assets in France may still be subject to French succession tax on those assets.

Tax Inheritance in France – What you need to know

Understanding tax inheritance in France is essential for individuals residing or inheriting assets in the country. French succession tax, follows a progressive banding scale and has key differences from the UK’s inheritance tax system. Spouses and civil partners in France have tax-free inheritance rights, and gift tax is applicable to lifetime gifts. French inheritance law treats assets differently based on the relationship to the inheritor.

French succession tax rates vary based on the relationship, with higher allowances for children and higher rates for others. Expats should consider forced heirship laws, create a will, and be aware of double tax treaties.

Data from June 2023

French succession tax is a complex topic requiring careful consideration for residents and inheritors. Understanding French inheritance tax law, differences from the UK system, and tax rates, is crucial for estate planning. The rules of forced heirship should also be considered.

Harrison Brook is a financial advice firm with advisers who specialize in assisting expats in France and around the world. Although we don’t provide tax advice ourselves, we work closely with tax professionals to ensure a comprehensive service for our clients. If you would like to find out more and explore how we can assist you, please feel free to contact us and fill in our ‘Get Started‘ form.

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