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If I follow UK inheritance rules, will my friend still pay French tax?

Electing to use British inheritance law is not the same as following UK inheritance tax rules

If you leave your French property to a friend under a UK will, they will still have to pay French inheritance tax Pic: Faizal Ramli / Shutterstock

Reader question: I live in France and am single and without children. I have chosen to be subject to UK rules in my will so I can leave my French house to a friend, which will be tax-free as my assets are under the UK tax-free limit of £325,000. However, my friend thinks that she will still have to pay French tax on it because of the French change in the law in November. Is she right? 

There are a couple of clarifications that I will make but essentially yes, your friend is correct. A great number of people make the same mistake, as the election of English law in your will is not an election of English inheritance tax. 

If France is your last place of residence at your death, then France will seek to tax your worldwide estate, even if you have an election of English law. 

For those living in the UK (or elsewhere outside of France) where the French property is just a holiday home, then France will apply inheritance tax to the French property only. 

The election of English law simply allows you to use the freedom of English law to bypass strict French laws and determine who inherits. 

It does not change the tax that they pay. Your friend will indeed face 60% inheritance tax on anything above €1,594. If they are disabled, they benefit from an extra tax-free exemption of €159,000. 

Read more: Is there a way to reduce 60% French inheritance tax for friends

The change of law in 2021, however, is not the reason. 

This rule essentially protects children who have been disinherited by the election of non-French law. 

They must be informed in such a case and can opt to make a claim for part of the French estate if they wish. 

This rule change did not change anything for you as you do not have children. 

Your election of English law, if correctly drafted, remains effective, but it does not elect English inheritance tax.

Author: John Kitching, French Law Consultancy. French Law Consultancy provides French legal advice

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