French Inheritance Tax

There are many aspects to consider when you decide to move to France, particularly if you are a pensioner and plan to spend the rest of your days there. While financial planning for your new life will be high on the list, you also need to think about estate planning and protecting your heirs from succession tax (inheritance tax) and France’s strict succession law.

Children can receive up to €100,000 tax-free each , for other relatives and non-relatives (such as step-children) the allowances can be low and tax rates high. Similarly, In France, 0 succession law dictates who you have to leave much of your estate too, your succession have to be specifically organized for your situation and the siutation of your family

French Succession Tax Rates and Rules

About succession tax in France, it is applied when assets die or as lifetime gifts. The tax is levied on each beneficiary, depending on their relationship to the owner and the amount received. If you are a French Resident when you die, each heir has to pay succession tax on their inheritance. This applies to all assets worldwide . But there is much more to consider,for example, if you have been living in the French country for six of the last ten years  and you receive an inheritance abroad, you can be liable for this kind of succession tax. This case depends on the  tax treaty between France and the nation where the assets are located. 

PACS and spouses  (“pacte civil de solidarité”) are exempt from succession tax on inheritances. Lifetime gifts are taxable at rates from 5% to 45%, though the first €80,724 is tax-free.

Otherwise, tax rates for children range from 5% to 45%, with an allowance of €100,000 each. This allowance won’t be applied to step-children ( and they have higher rates. Succession tax can be dangerous, potentially it can reduce the inheritance you were supposed to leave to someone by over half.

How to reduce French succession tax

There are many solutions that can help ease French inheritance tax: The amounts for all lifetime gifts are renewed every fifteen years. You can make tax-efficient gifts to step-children. Your home walue can be reduced by 20%, provided your spouse/PACs partner or children still live in it. Otherwise, you could use a usufruit  to give assets to children, while retaining a lifetime right to live in the property and/or to the income. This is a way of splitting the inheritance of a property between deaths while taking advantage of maximum allowances and lower tax rates.  The value of the gift  can be reduced on a sliding scale depending on age, therefore, the younger you are the better.

When it comes to savings and investments, there are structures that can provide you with significant  succession tax planning benefits in France, as well as gaining tax benefits for yourself.

Each family is different, so your estate plan is tailored  in order to reach your personal objectives and situation. Dealing with tax systems and succession laws of different countries is complicated, so you need to understand the rules and how the various planning options would work for you. 

Our lawyers offer specialist estate planning advice that might help you in order to give you in the best way possible.

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