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A Question on French Inheritance Tax

Sally Dilks, Associate Solicitor specialising in French Law at Buckles Solicitors LLP, answers a reader’s query.

Sally Dilks

A Question on French Inheritance Tax

Jane P writes:

My father is British and retired to France 5 years ago. Sadly, he passed away recently. Will my brother and I have to pay French Inheritance Tax (“IHT”) on both his English and French assets?

Hello Jane,

Cross-border taxation of an estate following death is complex.  To ascertain whether you and your brother will have to pay French IHT on your father’s English and French assets, it must be determined where he was domiciled for IHT purposes when he died, in accordance with French and English law.

According to the French Tax Code, your father will be considered tax resident in France if his principal abode was in France, if he conducted a professional activity in France, or if the centre of his economic interests was in France.

The concept of tax domicile differs in France and the UK.  Therefore, your father could be considered tax domiciled in both France and England when he died.  If so, the following “tie-breaker” rules apply to determine where he was domiciled for IHT purposes. This is a step-by-step process, looking at criteria such as the location of his permanent home(s), his personal and economic relations to France and the UK, the location of his habitual abode, and his nationality.

If your father was considered domiciled in France under the tie-breaker rules, it is likely that you will have to pay French IHT on your father’s English and French assets.  That said, under the Double Tax Treaty, where France taxes his English assets, France must allow a credit equal to the IHT charged in England on the English assets, and vice versa – to ensure that you don’t pay IHT twice on the same assets.




a question on french inheritance tax

First published in the March and April 2020 issue of The Local Buzz

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