Many of the French succession rules differ considerably from UK ones, creating various complications for UK nationals setting up life in France.
Estate planning can be especially difficult with France’s complex succession law and tax regimes. It is important to understand how these work and affect your family – you can then take steps to ensure your estate will be passed on according to your wishes and with as little tax as possible.
1. Succession Law and Forced Heirship
In the UK, you are largely free to leave your estate to anyone in the amounts that you wish (though Scotland does have some restrictions). The French Napoleonic code, however, was designed to keep property within the ‘bloodline’. Children must inherit between 50% and 75% of your estate (depending on the number of children). You can only leave the ‘freely disposable’ part to your spouse or civil partner.
2. EU Succession Law
Since 2015 it has been possible to use the EU succession regulation ‘Brussels IV’ to opt for the succession law of your country of nationality to apply on your death, instead of that of your country of residence. This applies to all foreign nationals living in the EU. However, an August 2021 ruling in France may allow children to make a claim for their share if they or the deceased was EU resident. But this is a new ruling, so we need to see how it develops.
This choice should be made clear in your will otherwise French law automatically applies. But take care. Choosing UK succession law could potentially make you liable for UK inheritance tax on your worldwide assets, as well as French succession tax (with any appropriate offset), which may impact the estate planning arrangements you already have in place.
3. Succession Tax
Succession tax in France is charged on each beneficiary (not on the estate as a whole), with the rates and allowances varying considerably depending on their relationship to you.
If you are resident in France when you die, each heir (except your spouse/civil partner) pays succession. This applies to worldwide assets. If you have been living in France for six out of the last ten years and receive an inheritance or gift from abroad, you could be liable for succession tax – this depends on the double tax treaty and inheritances from the UK are only taxable there.
Each child benefits from a €100,000 allowance and pays tax at progressive rates from 5% to 45%. Grandchildren pay tax at the same rates but only receive a €1,594 allowance on inheritances – but you can give them lifetime and cash gifts up to €31,865 tax free.
There is no tax on inheritances between spouses and civil partners, but lifetime gifts are taxable at 5%-45% with an €80,724 allowance.
Brothers and sisters generally receive a €15,932 allowance and pay tax at 35% or 45%. The allowance for nephews and nieces is €7,967 with a 55% tax rate. Anyone else pays tax at 60%, and their allowance is just €1,594.
4. Stepchildren and Unmarried Partners
Be aware that stepchildren and unmarried partners are considered ‘non-relatives’ for the purposes of succession law and taxation.
Stepchildren do not have the same right to automatically inherit as natural or legally adopted children. They are also liable for much higher rates of succession tax (60%), as will couples who are not in a recognised civil partnership.
If you have adult children from a previous relationship and remarry, you may not think of them as your spouse’s stepchildren. But if you leave assets to your partner (tax-free), who then passes them to your children when they die, they would be taxed at the highest possible rate as non-relatives.
Estate Planning for France
It is possible to overcome or mitigate these punitive taxes and the restrictions of succession law through strategic advance planning, so take time to explore your options and take specialist advice. If you have not bought your French property yet, look at the various methods of ownership to see what will work best for your family.
Blevins Franks are experts at helping British expatriates make the most of their wealth in the most tax-efficient way possible. We provide integrated, cross-border advice on tax planning, estate planning, investments and UK pensions. Our overriding aim is to give you peace of mind that your financial affairs are in order, for today and the future, for yourself and your family and heirs. We can also guide you through the new residence rules post-Brexit. We have ten offices across France and our advisers would be happy to discuss your plans to move to France and how we can help.
+44 (0)20 7389 8133
Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices, which are subject to change. Tax information has been summarised; individuals should seek personalised advice.
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