Inheriting from UK-based parents

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

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

With regard to inheritances from abroad, as a matter of general law, if the deceased was not a resident of France but the beneficiary is a resident of France 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.

However this is less a credit for their share of any inheritance tax that has been paid abroad.

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

However a Franco-British treaty on inheritance tax states that when a deceased person was a UK resident no French tax is levied with regard to property not situated in France. This means therefore that there is no French tax when a resident of France inherits from a UK resident unless the deceased also owned French property, the main example being real estate such as a French holiday home. Note that the inheritance tax treaty relates specifically to inheritance, not lifetime gifts.

Note, though, that even where no French tax is payable, a French tax resident is technically required to declare any inheritance they receive, with minor exceptions. The exceptions include if you are the child or spouse of the deceased and the total value of the estate was less than €50,000, or for other beneficiaries if the deceased’s estate was worth less than €3,000.

A declaration is made on form 2705-SD.

One tax lawyer said there may be a small fine if you are found not to have filed the necessary paperwork but there would not be a penalty based on a percentage of the inherited assets.

Some advisors working with English speakers in France report it is accepted to fill in what one has received, converted into euros on the date of receipt at Banque de France rates, and that it is not considered essential to fill in information about the whole estate or what other parties received.

State on the form that the inheritance is exempt under the UK-France treaty and send it to your tax office by a registered post letter with reception slip.