What are the regulations on trusts in France? - Partner article
Authorities must be kept informed on a variety of important details or serious penalties can ensue
Trusts are viewed with suspicion in France because of their lack of transparency
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Reader question: I am named as a beneficiary in a trust in the US (my ex-husband has me listed as beneficiary of a home in California upon his passing). I planned to look into the French tax implications should he pass, but did not know the existence of the trust itself needed to be reported within the 30 days of my arrival in France. What are the consequences of not doing so?
While trusts are prevalent in the UK and other common law jurisdictions, and are useful vehicles for holding and conveying assets, in France they are viewed with suspicion because of their lack of transparency.
French tax legislation therefore requires annual reporting on trusts, so authorities can monitor those containing French assets, or those with French beneficiaries, to ensure the correct tax is being levied on these assets.
Where a trust is created that includes French assets, or where the settlor, beneficiary or trustee is a French tax resident, the creation of the trust must be notified to the French tax authorities using a particular form within 30 days.
This form must also be used to report any modification of the trust, such as entry or exit of assets and addition or removal of beneficiaries and trustees, again within 30 days of the reportable event.
Where a trust is brought to an end, this must also be declared in the same 30-day window.
Additionally, there are annual reporting obligations requiring trustees to confirm the value of the assets in the trust as of January 1 each year. These must be sent to the French tax authorities by June 15 of the same year.
It is the trustee’s responsibility to submit the annual declarations and to declare the creation, modification or extinction of any trust connected to France by way of assets, beneficiary or trustee.
Failure to do so may result in a fine of €20,000.
It is likely that authorities would look most unfavourably on those who tried to hide the existence of a reportable trust or who made false declarations in bad faith.
According to the legislation, late submissions can also incur fines.
Sarah-Jane Legge is a solicitor in the French Legal Services team at Ashtons Legal
