Avoid Inheritance and Gift Taxes in France? ACLegal blogpost explaines what is possible to do

Avoid Inheritance and Gift Taxes in France? Here is what you can do

In our previous article, we delved into the three main criteria triggering the application of Inheritance and Gift Taxes in France. 

We saw how the three “nexus” of territoriality in France (i.e. domicile of the defunct, situation of the assets and residency of the beneficiary) allow French Inheritance and Gift Taxes to apply to any case where a link with France exists. 

We also saw how high the Inheritance and Gift Tax rates can be, which in some cases may reach up to 60% (i.e. when between the donor/defunct and the beneficiary there is no family relationship). 

However, there is good news : Tax Allowances (French: Abattements) apply to reduce the taxable amount of the Inheritance or the Gift.

The amount of the Tax Allowances renew every 15 years and vary according to the family or non-family relationship between the donor/defunct and the beneficiary. 

Tax Allowances are governed by article 779 of the French Tax Code. 

Let’s see how they apply. 

Inheritance and Gift Tax Allowances (Abattements)

Assuming that the beneficiary did not receive a donation over the previous 15 years, the Tax Allowance for the Gift or the Inheritance vary as follows according to the family relationship:

  • Parent-Child 
  • Brother/Sister 
  • Nephew/Niece
  • No family relationship 
  • ——–>          100.000 EUR 
  • ——–>             15.932 EUR
  • ——–>              7.967 EUR
  • ——–>              1.594 EUR

N.B.: Beneficiaries with handicaps can benefit from an additional tax allowance of 159.325 EUR.

These amounts mean that the beneficiary will pay Inheritance and Gift Taxes only on the amount that exceeds those thresholds.

Let’s look together at some examples below.

First example

If your parent is a tax resident of France and makes a donation for the first time to you for an amount of 100.000 €, you will not pay taxes on this gift.

In order for a beneficiary to benefit from the full Tax Allowance, there must have been no gift over the previous 15 years counting from the date of the donation or the date when the defunct passed away.

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Second Example

Assuming that the beneficiary received a 40.000 EUR gift over the previous 15 years, this entails that the available Tax Allowance for a further donation or inheritance from the donor will be 60.000 EUR (i.e. 100.000 minus 40.000). 

Therefore, the 15-year renewable Tax Allowance is a first step that a family can take to build up an Estate Planning strategy. 

Indeed, during their lifetime, two parents who are residents of France or owns assets in France may make tax-exempt donations up to 100.000 € each 15 years to each of their children, allowing to noticeably increase the tax-exempt amount of the Inheritance/Gift transfer of wealth.

Third Example

Each parent may donate to each child 100.000 € when 50-year old, 100.000 € when  65-year old and and, in case of death at 80 (which is the average life expectancy in France), have his/her child to inherit 100.000 €, which adds up to a total tax-exempt transfer of 300.000 €. This means that following this strategy the parents together can donate a total of 600.000 € to each child.

Once the Tax Allowance amount has been deducted, then the progressive rates of the Inheritance and Gift Taxes apply from the first taxable euro according to the “barème” of article 777 of the CGI. 

For official documentation about how Tax Allowances as well as Inheritance and Gift Taxes rates apply, follow this link of the French Tax Administration.

You will also find an official simulator of the Inheritance and Gift Taxes at this link. 


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The opinion expressed in this article is for informational purposes only.

This article does not constitute legal advice.

In addition, it is important to remind that each client’s tax issue is different because each client’s personal situation is different.

Should you have a similar tax issue, please contact us for an initial discussion of your case.