What is Inheritance Tax France?

For many Expats, France provides an ideal location for retirement with its favorable climates and a more relaxed way of life.

However, there are instances where your Inheritance Tax in France may exceed the Inheritance Tax you would have been charged in the UK. It is vital to have a plan in place and understand how to deal with French Inheritance Tax Laws.

Our Advisers have a tremendous amount of experience in dealing with Expats living in France so we are well-positioned to advise you on your Finances.

What is French Succession Tax?

The French equivalent of UK Inheritance Tax (IHT)

It is crucial to make clear that French Succession Tax and French Inheritance Tax are the same things; they are not two separate taxes. The official name of IHT tax in France is ‘droits de succession’ and so many English speakers refer to this as French Succession Tax. French Succession Tax is not to be confused with French Wealth Tax which is an annual tax that applies to your assets over €1.3M.

Differences between Inheritance Tax France & Inheritance Tax UK

Heterosexual Couples

Spouses and civil partners in France have the right to inherit their share of the estate free of tax, regardless of the size of the estate. One significant difference here is that both heterosexual and same-sex partners are allowed to enter into a civil partnership in France.

Lifetime Gifts

Another significant difference is that, in France, gift tax could be payable on any gifts made by a person during their lifetime. While in the UK, IHT laws only tax gifts made in the last seven years of a person’s life. This law means gift taxes are likely to be higher for you in France.

French Inheritance Law

France taxes the estate differently depending on who is inheriting each asset. French law stipulates the value of a person’s estate is the value of the assets they own in their name, plus 50% of the value of assets jointly held with their spouse or civil partner.

French Succession Rates

The French taxation regime includes different tax bands rather than taxing it all at a flat rate like in the UK. Each beneficiary is granted some level of the personal allowance. As explained above, spouses and civil partners inherit everything that has been left to them tax-free. There is, however, also a generous personal allowance of €100,000 for the children of the deceased.

UK France Double Tax Treaty Inheritance

This Treaty Mitigates Against Double Taxation

A double tax treaty currently exists between the UK and France. This UK France double tax treaty inheritance mitigates the possibility of you being subject to double taxation on a range of matters including inheritance tax (Gov.UK). This double tax treaty was last updated in 2008.

There is also a further tax consideration in regards to the French Wealth Tax. UK nationals entering France are exempted from wealth tax for five years on their assets located outside of France. This exemption can be used again if you cease to be resident in France for at least three years, and then become a French resident again at a later stage. This could significantly reduce your wealth tax liability if you have only just arrived in France.

Learn more about this on our new blog post: What is Inheritance Tax France?

CJ Financial offers investment solutions and financial planning for UK expats. Including pension advice for SIPP Transfer, QROPS Transfer, final pension transfer, to investment solutions for education, retirement and lump sum.