Double tax treaty is key to inheritance plans

Estate planning is a key cause for concern among UK nationals in France. French succession tax and law are complex pieces of legislation, and it becomes more of a minefield when you have to take the UK regime into account as well. Make sure you get it right if you want your assets to be distributed according to your wishes and your heirs to be as protected as possible from inheritance taxes.

The domicile issue

The UK domicile regime, with its ‘domicile of origin’, ‘domicile of choice’ and ‘deemed domicile’ statuses, is particularly complex.

Generally, the liability to UK inheritance tax depends on domicile, not residence. You can live outside the UK for years and remain UK domiciled, potentially making you liable for death duties in two countries.

The situation is different in France though. France and the UK have a specific tax treaty on inheritances, designed to avoid double taxation.

Both countries tax worldwide assets but under this treaty, UK nationals who are long-term residents of France are deemed to be domiciled in France for inheritance tax purposes. Tie-breaker rules will determine domicile if you are considered domiciled under both UK and French rules.

Take care, however, now with the EU regulation 650/2012, the “Brussels IV” law, covering cross-border inheritance issues which allows foreign nationals living in France ...

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