March 22

Some basic information on French inheritance law and inheritance taxes

It is generally agreed that French inheritance law allows less freedom for individuals to decide what will become of their assets after death in comparison to countries of Common Law tradition.

For instance it is not generally possible for parents to pass a will to advantage unreasonably one child rather than another.

On the other hand, the law is protective of heirs, since it is generally not possible for the children or spouses of deceased to dispose of property without the consent of all the other heirs.

Nevertheless, under certain conditions, since 17 July 2015 it si possible under EU Regulation 650/2012 for individuals to choose, in their will, to apply the law of their nationality to the succession and administration of their estates.

(You should refer to earlier poste Inheritance law, enforcement of EU REGULATION 650/2017 in France
http://gregoryhansonavocat.com/2018/03/22/inheritance-law-enforcement-of-eu-regulation-6502017-in-france/)

HOWEVER EU REGULATION DOES NOT ALLOW TO WAIVER PAYMENT OF FRENCH INHERITANCE TAX FOR ASSETS AND PROPERTY LOCATED IN FRANCE

Here is a non-binding table of tax rates applicable 22 March 2018, this document is purely indicative since, as always in tax matters, rates can evolve depending on government policy or personal situation.

Direct line:

• 5% on tranche upto 8072€
• 10% from 8072€ to 12109€
• 15% from 12 109€ to 15 932€
• 20% from 15 932€ to 552 324€
• 30% from 552 324€ to 902 838€
• 40% from 902 838€ to 1 805 677€
• 45% on tranche above 1 805 677€

Civil partners and spouses no inheritance taxes Brothers and sisters:

• 35% on tranche under 24 430 euros
• 45% above 24 430 Euros

Nephew uncles, first cousins, great uncles:

• 55% on total

Other heirs:

• 60% on total

This is a general table, it does not take into account tax deductions and penalties, I advise owners to seek specific advice on their personal tax situation.

For instance, each child could possibly be eligible to 100.000 € tax relief.

Once again, I must warn you that each tax situation is different and would have to be analysed individually. Indeed, tax law is subject to regular amendments. The information given above is of general order and cannot be binding for individual situations.

Vu the complexity of situation, I do not recommend “home-made” will or just relying on this general advice since each situation is different and owners should seek the guidance of a legal professional.

March 22

Inheritance law, enforcement of EU REGULATION 650/2017 in France

EU Regulation 650/2012 on «jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession» was adopted by EU on 04 July 2012 it came into force on 17 July 2015.

This Regulation simplifies rules of succession in an international context, unfortunately UK, Ireland and Denmark have opted out of it which might complicate enforcement.

On the other hand, France has not opted out, the Regulation is now enforceable on French territory. For states that have implemented the Regulation, the default position is that the law of the country in which the deceased was ‘habitually resident’ at time of death will apply to his estate.

This law applies unless the deceased was “manifestly more closely connected” with another state, in which case the law of this latter state would apply instead. Precisely what “manifestly more closely connected” means is not entirely clear, but it is anticipated that this latter test will only be applied in exceptional circumstances.

The law applied under these initial tests can be overridden by an express election (usually in a Will) for the law of the individual’s nationality to apply.

Electing for the law of their nationality to apply SHOULD allow individuals to circumvent the forced heirship provisions prevalent in European civil-law jurisdictions such as France.

I must however warn owners that article 35 Regulation (EU) No 650/2012 provides:

“Article 35 Public policy (ordre public)
The application of a provision of the law of any State specified by this Regulation may be refused only if such application is manifestly incompatible with the public policy (ordre public) of the forum.”

On the basis of this article, a potentially flouted heir could try to challenge application of foreign law in France by arguing that it contradicts to strongly with French rules. I ignore how such a contestation would be received by French Judges.

Indeed, because it has so recently entered into force, I have found no case precedent on interpretation of this EU Regulation.

Vu the complexity of situation, I do not recommend “home-made” will or just relying on this general advice since each situation is different and owners should seek the guidance of a legal professional.

December 28

Succession issues for properties purchased in France by UK or Irish citizens

Many UK or Irish citizens who have purchased a property in France are concerned about the future of their property after their death.

Indeed inheritance rules differ substantially.

Each situation is different and would have to be analysed individually, but here are some general consideration for an Irish married couple, residing In Ireland with children.

The general rule is: any real property owned in France will be governed by the French law of succession.

To avoid this it has been common practice for owners not residing in France to purchase property through a company (SCI ie: SOCIETE CIVILE IMMOBILIERE) because shares of a company are not considered as real estate so they can, under certain conditions, be ruled under Irish law.

The problem with this option is that the management of an SCI can be demanding (accountancy costs, tax declaration, no consumer law protection).

Another option is just to apply French law.

The disadvantage is that French law allows less freedom for individuals to decide what will become of their assets after death. For instance it is not possible for parents to pass a will to advantage unreasonably one child rather than another.

On the other hand, the law is protective of heirs, since it is generally not possible for children or spouses of deceased to dispose of property without the consent of all the other heirs.

Whatever option you chose, it will not dispense you from paying French taxes on inheritance.

The rules applicable vary depending on many factors notably: number of children, existence of a prenuptial agreement in Ireland, children from a first marriage etc…

Each case being different, I would advise owners to contact me directly to discuss their situation before eventually referring them to a NOTAIRE who could draft a will if it is relevant.

Some of you may have come across EU Regulation 650/2012 on « jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession » this was adopted by EU on 04 July 2012.

This Regulation will simplify rules of succession in the EU although UK Ireland and Denmark have opted out of it…