Inheriting in France from my UK-based parents?

My parents live in the UK and have assets there, some of which will eventually come my way. I am a French resident and have dual nationality. What are the liabilities for UK and French tax?

12 November 2017
By Connexion journalist

Nationality is irrelevant to tax liability. If the estate is British, it will be subject to UK inheritance tax.

As to French tax, general legal principles come into play as well as special ones in a Franco-British double tax treaty on inheritance tax.

As a matter of general law, if the deceased was non-French resident but the beneficiary is a French resident and has been for six or more years out of the 10 years preceding the death, then the beneficiary also pays French inheritance tax on the whole value of the inheritance received, whether the assets are in France or not, less a credit for their share of any inheritance tax already paid in the UK.

If, however, the beneficiary is non-French domiciled (or has been so domiciled for less than six out of the previous 10 years) then, under general law, only French assets are taxable in France.

However the inheritance tax treaty states that when a deceased person was a UK resident then no French tax is levied with regard to property not situated in France.

This means therefore that there is no French tax when inheriting from a British resident – and no declaration to be made – unless they had French property.

The main example of this being a French holiday home. Note that the inheritance tax treaty relates specifically to inheritance, not lifetime gifts. Where the recipient of a taxable legacy or gift is a permanent French resident, the onus to declare its receipt is on the beneficiary.

UK inheritance tax is levied on the overall value of the estate, currently 40% on the part of the value of the estate which exceeds the nil-rate band (£325,000 in 2016).

French inheritance tax is levied on the value of the share the legatee or heir actually receives and according to his or her degree of relationship to the deceased.

Note that as a general principle, a declarable inheritance received from someone who is not a resident of France must be declared by the French-resident beneficiary within one year of the death by filing two copies of forms 2705 AND 2706 with the Service des Non-Résidents, at 10 rue du Centre, TSA 10010, 93465 Noisy-Le-Grand Cedex. They can be contacted on 01 57 33 83 00 or on sip.nonresidents@dgfip.finances.gouv.fr

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2017 Inheritance Law guide (PDF version) - For expats or second home owners - 48 pages
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The guide, to be published on September 25, 2017, includes a chapter on the formalities following a death in France, issues of dependency, and reviews changes to French inheritance law affecting expatriates and second-home owners, which came into force on August 17, 2015
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