As a general rule, the taxable estate is determined according to the rules of civil law. However, a number of provisions of a purely tax nature depart from this principle (presumptions of ownership established by tax law, special rules applicable to certain assets, etc.).

Thus, for example, as a result of the natural extinction of the usufruct, the merging of the usufruct with the bare ownership upon the death of the usufructuary does not give rise to any duty, subject to the presumption of ownership laid down in Article 751 of the French General Tax Code (Code général des impôts, CGI).

As this area is complex, our tax law firm can assist you if needed.

Territorial scope of international successions and gifts

In the general case where the deceased was domiciled in France, all movable and immovable property is taxable in France, whatever its nature or location.

Thus, tangible movable property and real estate located abroad are taxable in France, as are foreign receivables and securities, as well as foreign assets or rights held in a trust and the income capitalised therein.

Double taxation is avoided by crediting the duties paid abroad against the tax due in France in respect of movable and immovable property located outside France.

Where the deceased was domiciled outside France, the following distinction must be made:

– the beneficiary (heir, legatee or beneficiary of a trust) is domiciled in France on the date of the transfer and has been so for at least six years during the last ten years: all movable or immovable property (received by that beneficiary) located in France or outside France is taxable in France;

– the beneficiary is domiciled outside France: only the French assets he or she receives are taxable in France.

Impact of international conventions

France has signed international conventions intended to avoid double taxation in respect of international inheritance duties, which depart from the general rules, for example by excluding certain assets from the scope of the duties.

The most common case is the exclusion of real estate located in the State of the other contracting party.

The impact of international conventions will therefore very often be significant, sometimes making it possible to reduce the taxable base in France considerably.

It should be noted that, in this situation, most of these conventions allow France – including where the deceased was domiciled in the contracting country – to apply the so-called “effective average rate” rule (in order to maintain the progressivity of the duties), using a mechanism comparable to that applied for income tax purposes.

France has signed numerous tax treaties, mainly concerning income tax.

Conventions relating to inheritance tax are much rarer, and those relating to gift tax are rarer still.

You will find HERE the list of conventions signed by France. “DO” indicates the existence of a convention covering gifts (donations) and “S” one covering successions.

Our tax law firm can assist you.