THE KNOWLEDGE
years, you will personally be liable to succession tax if you receive an inheritance or lifetime gift. Under the UK/France
inheritance tax treaty, inheritances (not gifts) from UK domiciles to French resident recipients remain subject only to UK inheritance tax and are not taxed in France.
SUCCESSION LAW While this article talks about leaving assets to distant and non-relatives, French succession law restricts who you can pass assets to. As protected heirs, children are automatically in line to inherit at least half your estate (two-thirds if more than two children). Spouses do not have the same standing and often only a small proportion of your estate is freely disposable. UK nationals can opt in
advance for their UK succession law to apply on their death instead, via the EU succession regulation, with the possible exception of French situs assets. You should always take specialist advice in advance to establish if this is indeed the right option for your circumstances and objectives, but in particular be aware that if you leave assets to distant or non-relatives, they could lose over half their inheritance to succession tax. There are arrangements
past five years, and is either over 50 or invalid, they benefit from the same rules as spouses and are exempt.
Nephews and nieces Nephews and nieces pay succession tax at a flat 55%, with a €7,697 allowance. If you do not have any direct
line descendants, the €31,865 allowance for cash gifts can be passed on instead to your nephews and nieces.
Remote and non-relatives Everyone else is subject to 60% succession tax on inheritances and gifts, with an allowance of just €1,594 (inheritances only).
Non-married partners Unless you have entered into a formal PACS agreement, unmarried couples are taxed
as strangers at 60%. You both need to be permanent French tax residents (unless one of you is a French national) to enter into a PACS.
Stepchildren If you are in a second relationship and you or your partner have children from a previous relationship, you need to watch out for this. Let’s say, for example, you
have a son from a previous marriage and your plan is to leave everything to your wife when you die, who will then pass it back to your son on her death. Since there is no bloodline between your wife and son, they will be treated as non-relatives and your son will suffer 60% succession tax. If instead you left assets directly to him, he gets the €100,000
allowance and pays lower tax rates on the balance. If you are in a similar situation, take personalised advice.
Parents If you make lifetime gifts to your parents or leave them an inheritance, as direct line beneficiaries they receive a €100,000 allowance and the same tax rates as children (up to 45%) are applied.
RECEIVING AN INHERITANCE Once you have lived in France for six out of the last 10 tax
you can use in France that offer considerable succession tax savings. They can provide other tax benefits, such as lowering tax liabilities on your investment income and gains, plus prove useful for estate planning. Seek expert advice so that more of your money will go to your beneficiaries and less to the taxman. This is a specialist area and you need to take advice that is personalised for you and your family. ■
Rob Kay is a Senior Partner at Blevins Franks Tel: 020 7389 8133
blevinsfranks.com
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FRENCH PROPERTY NEWS: November/December 202387
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