Inheritance tax in France: A complete guide

If you’re a UK expat living in France, you’ll need to get to grips with the tax system there. One potentially complicated part of it is inheritance tax. It can be useful to know about this, especially if you have French relatives or have retired to France and plan to see out your days there.

In this guide, we’ll run through everything you need to know about inheritance tax in France. This includes how the French ‘succession tax’ system works, what the rates are and how to calculate it.

We’ll also show you how to send large amounts of money securely between countries using the Wise Account. This can be extremely useful if you have inheritance tax to pay, or want to send money from an inheritance back to the UK.

But for now, let’s dive right into how inheritance tax works in France.

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What is inheritance tax?

Inheritance tax, known as IHT in the UK, is a tax paid to the government on the estate of someone who has died. The ‘estate’ usually encompasses all property, possessions and money in the bank.

Many countries have inheritance tax systems. Depending where in the world you are, the tax may be known as estate tax, inheritance tax or succession tax.

However, not all countries have this kind of tax in place. Australia, Singapore, Sweden and Norway are among a handful of countries which don’t charge inheritance tax at all.¹

Inheritance tax in France

In France, inheritance tax is called succession tax or *droits de succession. *

It works a little differently to the UK’s inheritance tax system. In the UK, the tax is applied to the estate of the deceased person. Whereas in France, it’s applied to the individual beneficiary. ²

Individuals all have a personal tax-free allowance, which varies depending on their relationship to the deceased. Above this, succession tax rates apply according to the value of the inheritance the person is receiving.

Spouses and people in French civil partnerships (PACS) are exempt from inheritance tax altogether.²

Who pays inheritance tax in France?

French inheritance tax applies to the assets of people who are resident in France for tax purposes. This includes all worldwide assets, including properties in other countries.³

The beneficiaries may not be living in France, but will still need to pay inheritance tax on their share of the estate.

You’re considered to be a tax resident in France if you spent more than 183 days a year in France and any of the following apply:³

• You have your main home in France
• You work in France as an employee or self-employed person
• You have a business in France.

If the deceased person isn’t a French resident but owns property in France, it’ll be subject to the country’s inheritance tax laws. So if a UK resident has a holiday home in France, the beneficiaries of it may need to pay French inheritance tax when they pass away.³

It’s also useful to know that the UK and France have a double taxation treaty. This ensures you won’t pay tax twice on the same assets, no matter which country you’re a legal resident of. ³

It’s important to get professional tax advice to check whether you’re legally resident in France or the UK. You may believe that only UK or French inheritance taxes apply to you, and plan accordingly - when actually, it could be the other way around. This could be a major misstep, causing confusion and complication for your beneficiaries.

Inheritance tax rates in France

Unlike in the UK where there is a flat rate of tax applied to estates valued over a certain sum, the French system uses a progressive banded scale. This means different rates apply depending on the value of the estate. Rates also vary depending on the relationship of the beneficiary to the deceased.

Each person gets a personal allowance, which also varies depending on their relationship to the deceased. You’re entitled to the personal allowance provided you’ve not used it in the 15 years preceding the death. This means that if you’ve already received an inheritance following the death of another relative within the last 15 years, you may have used up your personal allowance.

Anything you inherit above your personal allowance will be taxed.

Take a look below⁴ for the personal allowances for all people subject to inheritance tax in France, along with the tax rates which apply to each. These vary depending on the value of the person’s share of the estate or assets to be inherited.

Relationship to deceased	Personal allowance	Inheritance tax rates
Child or parent	€100,000	5% to 45%
Sibling	€15,932	35% to 45%
Nephew/niece	€7,967	60%

Beneficiaries with disabilities will have an additional personal allowance of €159,325.⁴

Taxable assets and exemptions

Under French inheritance laws, all property and assets are included as taxable assets. The estimated value of real estate, valuables (including furniture, jewellery and artwork) and money will be added up, along with the person’s debts (if any). Debts will be subtracted from the assets to come up with the total value of the estate.

There are also some exemptions under French inheritance tax laws. The spouse or civil partner of the deceased is exempt from paying succession tax.⁴

Siblings may also be exempt if they meet all three of these requirements:⁴

• Are single, a widow(er), divorced or separated at the time of the death
• Are over 50 years of age or disabled at the time of the death
• Have lived continually with the deceased for the five years preceding their death.

How to calculate inheritance tax in France

Here’s an overview of how French succession tax can be calculated:⁴

1. The taxable net asset is calculated, by minusing the liabilities (debts) from the value of the inventory of assets
2. The taxable net asset is then distributed between heirs, with spouses and children receiving a certain proportion according to French succession laws. The remaining portion is divided according to the deceased person’s will.
3. For each beneficiary, the taxable sum is the amount left after their personal allowance has been deducted.
4. On the remaining sum, tax rates will apply according to the beneficiary’s relationship to the deceased and the value.

How to pay inheritance tax in France

If you are a beneficiary who is liable for inheritance tax, you will need to pay it within six months following the determination of the estate. This deadline is extended to one year if the person died outside of France.⁵

If you need more time to pay, you can request a demand de credit from the tax authority. This gives you up to three years to pay, and is usually only granted if the following conditions are met:⁵

• Some form of guarantee can be offered
• Where at least 50% of the inheritance is in the form of non-cash assets.

In order to pay, you’ll first need to complete a Declaration of Succession form and file it with the public finance centre of the deceased's home.⁶

Inheritance tax can be paid in cash (max. €300), cheque, credit card or bank transfer. ⁷

If you’re living in the UK or another country, a solution such as Wise could be ideal for sending a payment for inheritance tax to France. You can send money worldwide with Wise, for low fees* and mid-market exchange rates. There’s even a dedicated service for securely sending large amounts.

Wise - For big money transfers at life’s big moments

After reading this, you should have a better idea of how the French inheritance tax system works - and how it applies to you and your family. We’ve looked at personal allowances, rates, exemptions and who has to pay the tax.

We’ve also covered how to pay inheritance tax in France. If you need a way to pay inheritance tax, send inherited money back to the UK or generally manage your finances between countries - Wise is the perfect solution.

With Wise, you can hold and convert between 40+ currencies in your online account. And you can send money worldwide for low, transparent fees* and mid-market exchange rates.

If you’re sending a large sum between countries, read our quick guide on what documents you’ll need. Whether you’re paying foreign bills or trying to get the best exchange rates when repatriating funds from overseas back to the UK, your Wise account can do it all.

FAQs about inheritance tax in France

Below are some of the most frequently asked questions:

How much inheritance tax do you pay in France?

The amount of inheritance tax you’ll pay in France varies depending on:

• Your relationship to the deceased
• The value of your share of the inheritance
• Whether or not you’ve used your personal allowance within the last 15 years (i.e. you’ve inherited from someone else within this period).

But generally speaking, rates range from 5% all the way up to 60%.

Does France tax foreign inheritance?

If the deceased person was considered a resident in France for tax purposes, then yes - their foreign assets will also be taxed under French inheritance tax laws.

How to avoid inheritance tax in France?

Each person has a personal tax-free allowance, which can reduce the amount of inheritance tax that beneficiaries need to pay.

If the estate in question is yours, you can help to reduce the amount of tax your beneficiaries need to pay when you’re gone through gifts during your lifetime. In France, you can give gifts of up to €31,865 every 15 years free of tax, provided the recipient is over 18.⁸

Which EU countries have no inheritance tax?

Within the EU, the following countries have no inheritance taxes:⁹

• Austria
• Cyprus
• Estonia
• Latvia
• Malta
• Romania
• Slovakia
• Sweden.

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Sources used:

1. The Telegraph - The countries that abolished inheritance tax – and are now booming
2. Kentingtons - Inheritance Tax in France
3. French-Property.com - Guide to French Inheritance Laws and Taxes
4. Impots.gouv.fr - How do I calculate inheritance tax?
5. French-property.com - Guide to French Inheritance Laws and Taxes - Payment of Taxes
6. Service-public.fr - Inheritance tax - Declaration
7. Service-public.fr - Payment of inheritance tax
8. Cameron James - French Inheritance Tax 2023
9. Euro News - Inheritance tax across Europe: How do the rules, rates and revenues vary?

Sources last checked on date: 19-Aug-2024