Most situations revolve around having an asset, transferring it and selling it, which requires dealing with the followings three main taxes:
- Inheritance tax: the tax is personal to each heir
- Wealth tax: the tax is personal to the owner. Please be aware that holding an asset through a succession trust is irrelevant to the French tax administration. The tax will be due by the person registered as the owner at the land registry.
- Capital gains tax: upon selling the property, capital gains is payable personally by the seller.
There are also other various taxes that may apply in different situations, such as for income tax, business taxes, local taxes, planning taxes to name but a few.
French Inheritance Tax
French inheritance tax varies from 0% to 60%. The different rates depend on the proximity between the deceased and beneficiary. The tax is personal to each beneficiary and is not paid out of the estate before any distribution of funds is made. This means that even if two people were to inherit the same proportions of an estate, they may end up with different amounts on the basis that their personal tax-free allowance and applicable tax rates are not the same.
An example of this is where a deceased person has one child and one step-child and divides their estate equally between them. The former would inherit in accordance with the second table below and the step-child having the minimum tax allowance as set out below would then be subject to tax at 60%.
Tax rates and allowances applicable to estates and donations will no longer be updated every year, from 1 January 2013.
Please refer to our guide to French Succession law and Inheritance Tax.
Between spouses and partners having signed a CPA or a PACS
| Band of value | Rate of tax |
|---|---|
| On the whole amount received | Total exemption of inheritance tax |
Between parents and children
Tax free allowance per child: 100,000 € Since 17 August 2012
| Band of value | Rate of tax |
|---|---|
| Less than 8,072 € | 5% |
| 8,072 € to 12,109 € | 10% |
| 12,109 € to 15,932 € | 15% |
| 15,932 € to 552,324 € | 20% |
| 552,324 € to 902,838 € | 30% |
| 902,838 € to 1,805,677 € | 40% |
| 1,805,677 € upwards | 45% |
Between siblings
Tax free allowance per beneficiary: 15,932 €
| Band of value | Rate of tax |
|---|---|
| Less than 24,430 € | 35% |
| 24,430 € upwards | 45% |
Between collaterals up to fourth degree
Tax free allowance per beneficiary: 7,967 €
| Band of value | Rate of tax |
|---|---|
| On the whole amount received | 55% |
Between people not listed above
Tax free allowance per beneficiary: 1,594 €
| Band of value | Rate of tax |
|---|---|
| On the whole amount received | 60% |
French donation and succession allowances
| Level of proximity | Donation every 15 years (Euros) | Succession(Euros) |
|---|---|---|
| Between parents and children, surviving spouse or CPA – PACS Partner | 100,000 | 100,000 |
| Surviving spouse or CPA – PACS Partner | 80,724 | Non taxable |
| Handicapped Child | 159,325 | 159,325 |
| Between grand parent and grand children | 31,865 | 1,594 |
| Between great-grand parents and great-grandchildren | 5,310 | 1,594 |
| Between siblings | 15,932 | 15,932 |
| Nephews and Nieces | 7,967 | 7,967 |
| Other people not listed above | 0 | 1,594 |
Wealth Tax
Threshold: 1,300,000 Euros
If the total chargeable wealth of your household amounts to less than 1,300,000 Euros, then you do not have any Wealth tax liability. However if your overall French estate is worth more than 1,300,000 Euros then you will have to declare the total chargeable of your French assets. Note that in that case, the first 800,000 is tax free.
| Band of value | Rate of tax |
|---|---|
| Less than 800,000.00 € | 0% |
| 800,000.00 € to 1,300,000 € | 0.5% |
| 1,300,000 € to 2,570,000 € | 0.7%* |
| 2,570,000 € to 5,000,000 € | 1% |
| 5,000,000 € to 10,000,000 € | 1.25% |
| 10,000,000 € upwards | 1.5% |
* a discount applies to assets between 1,300,000€ and 1,400,000€
Capital Gains Tax
If you are selling a property in France, it is possible that there will be a Capital Gains tax liability, which could apply in France or the UK, or indeed both.
The rates of the tax depend on a number of issues, and the calculation will therefore prove quite complex. It is a matter upon which we would need to consider all transactions on a case by case basis.
NOTE
Particular exemptions, reductions or other matters may affect the actual calculation, and specialist advice should be sought. It is also important to consider the potential incidence of income tax, capital gains tax, wealth tax and local taxation, as well as the implications of any Double Tax Treaties.
We will be able to help in these areas. Please seek our guidance on any particular questions you may have.
Tax Rates are valid as at 01 January 2013.