Family inheritance from abroad

I am British and live in France and am married to a Frenchman. We have two sons who are dual nationals and live in France.My sisters in the UK who are childless want to put my sons in their wills as their main beneficiaries but are concerned that my sons may have to pay high French inheritance tax, as they would if they inherited from aunts in France. F.G.

24 May 2017

You are right to be concerned. If a French tax resident receives an inheritance – whether it is from a French-resident deceased or an British-resident
deceased – they need to declare the value of the inheritance that they receive on a “déclaration de succession”, and it is then assessed for French inheritance tax.
A person is treated as taxable in France on this basis if they have been resident in France for six out of the last 10 years.

The applicable rates of inheritance tax for inheritance from an aunt to a niece or nephew are pretty high.
There is a tax -free allowance of €7,967, and inheritance tax is then charged at 55% above that.
If the beneficiary has been resident in France for fewer than six out of the last 10 years, then they are not subject to French inheritance tax.
However, the double tax convention comes to the rescue for inheritance tax.

Under the terms of the 1963 UK and France Tax Treaty, where the deceased dies domiciled in the UK and has no property in France, then there is no inheritance tax in France.
If the deceased did own property in France, then it would be assessed for French inheritance tax, and the tax paid in France could be offset against the equivalent tax against the same asset paid in the UK.
Be careful, however, if your sisters plan a lifetime gift to French resident beneficiaries rather than a bequest, as there is no double tax convention in place and French gift tax will apply. This is paid on the same scale as inheritance tax.

Question answered by Barbara Heslop of Heslop & Platt answers a reader query

Tel: +44 (0)113 393 1930 -

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