How must I declare family trust in England under French law?

Partner article: The rules around declaring an English trust whilst a residence of France

Although you cannot start a trust in France, it does recognise those of other countries

Reader question: I am a beneficiary of a family trust based in England. I heard that I need to declare this but am not sure what I need to do?

It is not possible to start a trust under French law but France does recognise the concept.

However, it adopts a wide interpretation of trusts, which may include charitable trusts, discretionary trusts, bare trusts, family settlements and pension trusts.

Trusts are treated with suspicion in France and are subject to a strict regime.

Since 2011, the trustees of most types have been bound to declare the trust in France where:

  • the person putting assets into trust (the settlor) is resident in France

  • any trustees or beneficiaries are resident in France

  • any assets held within the trust are situated in France

Trustees have two main obligations in France.

The first requires them to report the creation, modification or termination of a trust, generally within a month of the trigger event.

The second is a declaration of the net value of the assets held in trust as of January 1 each year.

There are two separate forms, which should be submitted to the French tax office.

They must give details of the terms of the trust, together with details of the settlor, beneficiaries and trustees.

Generally, the deadline for submitting the paperwork is June 15.

Failure to comply with reporting obligations can result in fines, to which the settlor, beneficiaries and trustees are held jointly liable.

Note that there is still an obligation to declare a trust that has a French resident beneficiary, even where the funds are sent to a UK bank account.

It is also important to bear in mind that French inheritance tax may be payable on any distributions made from the trust to a beneficiary who is resident in France.

If the settlor is resident in France, the trust might also need to be assessed for wealth tax.

This reader question was answered by Antonia Ridley-Hughes of Ashtons Legal

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