AC Legal blogpost: Who pays gift tax in France

Who pays gift tax in France? What you need to know

Inheritance and Gift Taxes may apply when someone leaves or gives you money or any other movable or immovable asset without asking anything in return.

If you have a personal or patrimonial relationship with France, maybe it is worth learning more about whether and when Inheritance and Gift Taxes are due.

This is all the more true when you think that Inheritance and Gift Taxes in France may go up to 45% and even 60% in some cases.

Let’s get started with a first bird’s eye view of the cases where Inheritance and Gift Taxes apply in France.

Inheritance and Gift Taxes in France - Main Taxation criteria

According to article 750-ter of the French Code Général des Impots (CGI), in France 3 main criteria apply with regard to Inheritance and Gift Taxes (French: Droits de successions et de donation):

CASE N. 1 - The defunct or the donor is a resident of France

In this case and subject to the provisions of a Double-Taxation Agreement (if any), the entire estate of the defunct as well as any gift of movable and immovable property, situated in France and abroad, will be subject to French Inheritance and Gift taxes. 

Indeed, it is the physical nexus between the defunct or donor that makes French Inheritance and Gift Taxes applicable.

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CASE N. 2 - The assets inherited or received as a gift are situated in France

In this case, the law supposes that the defunct or donor is a tax resident of a country other than France. 

French Inheritance and Gift Taxes will then apply only to the assets inherited or received as a gift that are situated in France.

CASE N. 3 - The heir has been a resident of France for more than 6 years over the last 10 years

In this case, the law supposes that the defunct or donor is not a tax resident of France and that the inherited or gifted assets are not situated in France.

Subject to the provisions of a Double-Taxation Agreement (if any), French law then takes into account the tax residency of the beneficiary of the inheritance or the gift in order to apply French Inheritance and Gift Taxes.

However, this will happen only in case the beneficiary has been a resident of France for more than 6 years over the last 10 years.

If you want to learn more about Inheritance and Gift Taxes in France, you may read through our articles on studiolegalecatasti.it (in Italian and French), take a look at the Official Documentation of the French Tax Authority on this specific subject matter as well as at the Double-Tax Agreements with regard to Inheritance and Tax signed and ratified by France on the French Government website or just get in touch with us for a first assessment of your questions. 

We will be in  touch soon with more articles in order to enter more into the details of the French and Inheritance Taxes, the exceptions to application of the main taxation criteria and the possible strategies to mitigate and legally avoid French Inheritance and Gift Taxes.

Then, stay tuned – we will keep you posted!

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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.

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