Under French tax law (specifically, Article 800 of the Code Général des Impôts), a tax resident in France is “technically” required to declare any inheritance they receive, regardless of where the deceased lived or where the assets are based.
So even if you inherit from a UK-based relative and receive funds from UK accounts or property, you are supposed to notify the French tax office.
Here is the good news, however: thanks to the UK–France inheritance tax treaty, signed in 1963 and still in force post-Brexit, there is usually no French tax to pay in these cases.
The treaty says that if the deceased was a UK tax resident, and if the assets you inherit are located in the UK then France has no taxing rights. The UK system applies instead, which, as many will know, often results in no inheritance tax at all thanks to generous nil-rate bands and spouse exemptions.
Read more: Make sense of French inheritance tax
In most cases then, declaring it is simply a matter of formality. The French tax office is not being cheated, as no tax is due under the treaty, and no evasion or avoidance is taking place.
A declaration can be made using form 2705-SD.
How to complete the declaration
This is, by no means, official guidance. I would wager that if you spoke to five different French tax inspectors, they would all come up with different answers as to if and how you need to declare.
This is merely the point of view of a tax consultant with a couple of decades of experience dealing with French tax offices.
Simplicity usually works best. You do not need to complete the entire form or go into elaborate detail.
First, fill in your name and French address under “désignation du bénéficiare” at the bottom of the second page.
Next, fill in the amount received in euros after “montant des dons ou donations”.
Read more: French inheritance tax: current rules and what reforms are proposed
You can convert pounds to euros using the exchange rate on the day you received them. If doing so, state the amount in pounds next to it and the exchange rate used, just in case they wish to adjust it. (They like to use the Banque de France rate, and having complete information makes it easy for them).
Beneath this, in the blank space, note that it is exempt under the UK–France tax treaty, as the donor was UK-resident, and the assets were UK-based.
It is helpful to repeat this above the form title at the top of the first page, pointing them to page two, so they do not think they have received a blank form and disregard it.
Do not be shy: big, bold letters, larger than the heading! And if you have a fluorescent highlighter, now is its moment to shine brightly. I am not saying the tax office will miss it… but why take the risk?
There is no need to declare the full value of the estate, nor what other heirs received. The declaration is about your share, not the total picture.
If posting this form to your tax office, send it by registered letter (lettre recommandée avec avis de réception). Where it says “référence client” add the words: “Déclaration de succession.” Keep a copy and the return slip for your records.
Read more: Can heirs inherit debt in France?
Submitting this form does not mean you are excused from further questions, corrections, or being told that you have wasted your time as they don’t need it! That is up to the individual inspector dealing with your file, so anything could happen. However, you have fulfilled your technical legal duty under French law and declared it.
What if the UK donor owned French property?
Here’s the key exception: if the UK donor left you French real estate (such as a holiday home or rental property), France will tax it, regardless of where the donor lived.
This is because real estate is always taxed where it is physically located.
The UK–France treaty confirms that immovable property is taxed in the country of situs.
So, if your UK-based relative passes away and leaves you their French home, it must be declared, and depending on your relationship and the property’s value, you may be liable for French inheritance tax.
Read more: What does indivision mean for a French estate?
It is worth noting that French property will always be handled and declared by the French notaire handling the estate. They may not, however, be interested in declaring the non-French assets, so this may still fall to you.
What happens if you do not declare the UK estate?
Penalties for failure to declare are aimed at evasion or fraud, not honest individuals receiving treaty-exempt inheritances. The French tax office is not losing out, and it is well understood that the treaty overrides domestic law.
However, for those who prefer to be thorough (naturally, we would strongly encourage people to follow the letter of the law), a simple declaration, as outlined above, is enough to close the loop.
In summary, if you live in France and inherit from a UK relative, you are likely dealing with an exempt inheritance under the treaty. A quick declaration is often all that is needed.
However, when the inheritance involves property in France, the rules change and French tax is very much on the table.
As always, when in doubt, speak to a qualified adviser. However, do not lose sleep after receiving a few pounds from Aunt Mavis’s old Nationwide account. France will survive without it!
Robert Kent is a financial adviser with Kentingtons.com
