What to do if… you inherit in France from the UK

For foreign residents living in France, the process of inheriting money or assets from relatives abroad can be unfamiliar.

Take the example of a British citizen permanently resident in France whose British mother or father dies, leaving an inheritance of €60,000.

Their assets must first go through the UK’s administrative process and, if they left a will, the named executor must apply for a Grant of Probate to manage and distribute the funds accordingly.

If they left no will, a close relative must apply for Letters of Administration to legally distribute the estate.

Your obligations

As a British citizen living in France, your tax obligations are governed by French tax law plus the UK-France inheritance tax treaty, and the first tax to consider is UK inheritance tax (IHT).

Currently, if the total value of your parent’s worldwide estate is below £325,000, you do not have to pay IHT in the UK.

For international inheritances, the French taxation generally depends on how long you have lived here.

"If you have been resident in France for fewer than six of the 10 years preceding the inheritance, France will generally not tax assets situated outside France,” said Rémy Delvallée, a bilingual tax lawyer specialising in international taxation.

“If you have been resident in France for at least six years during the previous 10, your inheritance could, in principle, fall within the scope of French inheritance tax, but the UK-France inheritance tax treaty takes precedence, so UK assets may not ultimately be taxable in France.”

However, under French tax regulations anyone inheriting from abroad should file a formal inheritance tax declaration (déclaration de succession) known as form 2705-SD with the tax authorities within 12 months. You can find the document here.

The only official exceptions to declaring are if you are the child or spouse of the deceased and the total value of the deceased’s estate was less than €50,000 (or less than €3,000 for other beneficiaries).

It is worth noting that if the funds pass through a UK bank account in your name, you must declare that UK account on your annual French tax return (Form 3916).

Transferring the money

Once the UK probate is complete and the executor distributes the money, you can transfer the funds, which can be wired directly from the UK estate account to your French bank account.

If the funds are in British Pounds (GBP), it is worth considering a specialised currency exchange broker rather than a traditional bank, as you will probably get better exchange rates and lower transfer fees: on €60,000, it can mean a significant saving. 

French banks respect strict regulations against money laundering, so they require proof of the origin of the funds. For this to go smoothly, you should supply a copy of the Grant of Probate, a letter from the UK executor or solicitor, and a copy of the death certificate. 

“The bank can also request proof of tax transparency or a certificate of non-liability before crediting foreign funds to your account,” said Mr Delvallée.

“In that case, you may need to file a formal inheritance tax declaration with the French Non-Residents Collection Office (Recette des Non-Résidents), which deals with the estates of individuals domiciled outside France.”

Other factors to consider

Other factors that can alter your legal obligations as the heir include your relationship to the deceased and the total value of their estate worldwide.

Note, too, that 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.