Held To Account

As a property owner in France, how will French succession tax affect your heirs? Rob Kay outlines who has to pay and how much – and explains why the EU succession regulation does not apply to taxation.

- Rob Kay

Like UK inheritance tax, French succession tax is a tax on gifts and inheritances but there are considerable differences. It is important to spend a little time understanding how it affects you if you are moving to France or buying property there, or have already done so.

If you are resident in France, any worldwide assets you give away on death or as a gift are liable to succession tax. Any assets you own in France, such as property, are always subject to this tax, regardless of whether you or the recipient lives there.

Who does the tax affect?

French succession tax is calculated on, and paid by, each individual who receives the assets, whether by way of a lifetime gift or as a bequest (unlike the UK, where the estate pays the tax).

Transfers between spouses and PACS (civil) partners on death are tax free, but lifetime gifts are not. For everyone else, rates and allowances vary according to their relationship to you in terms of bloodline and marriage. The more distant the relative, the higher the tax rate. Under the UK/France double tax treaty, long-term French residents are deemed to be domiciled in France for UK inheritance tax purposes. This means that if you are resident in France when you die, your worldwide estate will be taxable in France, not in the UK.