3.2. How to Make an Inheritance Tax Declaration
3.2.1. Is a Declaration Necesarary?
An inheritance declaration is called a déclaration de succession, while inheritance tax is called the droits de succession.
The declaration should be made within six months of death of the deceased, or 12 months if they lived outside of France.
That is an insanely short period of time to sort out family affairs, particularly for inheritors who do not speak French and/or where no prior inheritance planning has taken place.
However, these deadlines are only important if there is inheritance tax payable, as interest and penalties apply if there is non-compliance. If there is no tax liability, then they are less of a problem.
If due to the complexity of the case it is not possible to submit a declaration in this timescale it is possible to submit a partial declaration, with an amount on account of taxes that may be due.
France has no tradition of ‘executors’ of an estate in France, in the same way as occurs, for instance, in the UK. The estate is vested directly with the beneficiaries. There is no grant of probate or letters of administration.
As a general rule, the next of kin are collectively responsible for making the declaration and managing the inheritance process, although as we state below, it is possible to appoint an administrator.
A notaire must also be appointed to deal with administration of an estate if the deceased owned real estate in France.
The rule also applies if they died domiciled in France with gross assets exceeding €50,000 (spouses and children as heirs, or €3,000 for other heirs).
No declaration is necessary if the gross assets of the deceased are less than €50,000 (€3,000 other heirs), provided the inheritors have not previously benefited from a gift from the deceased, called a donation.
Accordingly, these thresholds apply before the deduction of any debts outstanding against the estate, but after deducting any gifts made during their lifetime, provided they were declared to the tax authority at the time they were made.
Neither is it necessary to make an inheritance tax declaration if husband and wife have entered into a French marriage contract régime de communauté universelle with the clause d’attribution intégrale.
Nevertheless, the surviving spouse will normally wish the property to be transferred into their sole name (although not compulsory), something which can only be done by a notaire.
It may also be necessary to verify with the notaire that there is nothing in your case that warrants a declaration, e.g. life insurance policy beyond exemption threshold, assets held outside of the marriage contract.
You may also want to make a declaration in these circumstances if you seek a nil return from the tax authorities, which can be used in management of the estate.
Moreover, if you intend to sell real estate you have inherited, the value of the property at the time of the inheritance is recorded on the tax declaration. This value could then be used to fix the value against which your potential liability to capital gains tax would be calculated (assuming you would be liable).
If the property was the principal home of the deceased it benefits from a 20% abatement against liability to inheritance tax. This reduced value is the one that is then used as the base line to assess liability to capital gains tax if the property is then sold.
You also need to be aware that:
- The local mairie is required to inform the tax authority of the death (together with information on known next of kin);
- French banks are required to inform the tax authority of bank accounts (including share accounts) held by the deceased;
- French insurance companies are also obliged to declare the existence of life insurance policies and precious objects insured by them.
The tax authority have up to 10 years following the inheritance tax declaration to contest the information supplied to them, notably if assets have been omitted from the declaration.
If you believe you may be the beneficiary of an inheritance, but you are unable to trace the deceased, you can try the government search service at Rechercher une succession vacante.
3.2.2. Declaration Procedure
For those who were resident in France, then the declaration should be made to local tax office.
In the case of non-residents with property in France the declaration should be made to Centre des Impôts des Non Résidents (CINR), 10, rue du centre, 93465 Noisy-le-Grand. Their e mail address is firstname.lastname@example.org
Either the next of kin, legal guardian or mandataire are obliged to make a declaration to the tax authorities, and to discharge any taxation liabilities on behalf of the inheritors.
Where there is more than one inheritor a single declaration on behalf of all inheritors is suffice, although it is frequently the case that each inheritor completes a declaration relating to their own inheritance.
The relevant declaration forms are available from the local tax office (Centre d’impôts).
The next of kin may make the declaration themselves, but by far the most sensible route is to contact a notaire who is in the best position to advise and assist on all of the formalities.
Indeed, where the deceased owned real estate, the involvement of the notaire is obligatory as no transfer of property can take place without their involvement.
Heirs can choose the notary by mutual agreement, each having the right to be advised by their own notary (by paying their fees). In the event of a conflict, the professional rules that apply first designate the notary proposed by the surviving spouse (or by the PACS partner if they inherit in the absence of children), then comes that of the compulsory heirs , then that of universal legatees and finally that of non-reserved heirs.
You will need to supply a substantial amount of documentation to the notaire
They will need the passport, birth certificate, marriage certificate, and the will of the deceased, as well as identity documents of inheritors. Whether they are prepared to accept copies or originals will depend on the notaire, but generally speaking original documents are required.
They will also need all bank details and documentation on assets owned personally and jointly by the deceased.
You will also need to provide them with their tax returns and information on social benefits they may have received.
Details of debts must also be provided, including utility bills.
The fees of the notaire are unlikely to be a trifling matter, normally running into several thousand euros. The fees are regulated by the government, but there are a range of different fees that apply to the various aspects of dealing with the inheritance, including transfer of the property.
The property transfer fees will be higher for those with a French marriage contract communauté universelle simply because they are calculated on a percentage of all of the property owned by the couple. This is one disadvantage of this marriage contract.
Accordingly, with potentially substantial notaire fees to pay, and the possibility that there may also be an inheritance tax liability, you need to give some consideration to the choice of your notaire.
Whomever you choose, you would be well-advised to discuss with the notaire the fees that will apply. Even if the amount of the total fees cannot be determined at the outset, obtain clarity on the formulae that will be used.
Some notaires can be rather formulaic about inheritance declarations, when a more client orientated approach might reduce your potential liability. You might also be best advised to appoint a legal advisor in your 'home' country, particularly if you are non-resident.
The main task undertaken by the notaire is called a déclaration de succession, with the division of the estate determined through various actes notariés.
Part of this process involves a submission to the tax authority of an inventory of the estate and the taxes payable (if any) by each beneficiary; the other part deals with division of the estate between the beneficiaries.
In order to carry out this task the notaire will:
- Establish the list of beneficiaries, which can, in rare cases, require a prior genealogy search;
- Verify if a Will exists and/or a gift procedure has been undertaken;
- Liquidate any French marriage contract in existence;
- Evaluate the net worth of the estate;
- Undertake the division of the estate;
- Calculate the inheritance taxes payable;
- Submit the inheritance tax declaration and pay inheritance tax (within 6 months if resident, 12 non-resident);
- Arrange for payment of the inheritance taxes.
- Distribute the net estate to the inheritors
The use of a genealogist to undertake a search for heirs is not uncommon in relation to international successions. It can be costly and sometimes done in undue haste, as we set out in our France Insider article Heir Hunters and French Inheritances.
We receive a regular flow of complaints from readers about notaires concerning delays in dealing with a succession or witholding the release of funds. You can read about the complaints procedure to use against a notaire at Complaints against Notaires.
3.2.3. Charges and Taxes
The level of inheritance taxes (droits de succession) that might be payable varies from 0% to 60%, depending on the value of the estate and the relationship of the beneficiaries to the deceased. You can read information on the calculation of inheritance taxes in the next chapter of this guide.
Notaire fees are likely to be at least several thousand euros, the amount of which will depend on:
- the nature and value of the estate,
- the inheritance planning undertaken by the deceased,
- the relationship of the deceased to the beneficiaries (including minors),
- the wishes of the beneficiaries regarding the division of the estate.
- the nature of the marriage regime
If the notaire is insisting on a genealogy search the fees of the genealogist can be substantial. These fees are not regulated and it is imperative you ensure control over the appointment. You should also question the notaire on the necessity of such an appointment if you do not consider it necessary.
The fees are shared equally between all the inheritors, subject to any agreement between them about who should pick them up. If there is no agreement, all inheritors are liable in equal measure.
You will find that a number of the tasks are calculated on a fixed tariff, none of which on their own are substantial, although they can mount up.
Thus, an acte de notoriété that is used to prove the status of heir to the administration or banks costs €67.92, including VAT to which must be added some minor disbursements, which may take the total to circa €120. (2022/3)
For the calculation of inheritance tax, the tax authorities assume that the deceased's furniture has a value equal to 5% of the gross inheritance assets. This may represent a much higher sum than in reality is the case. If you wish the notaire to carry out an inventory to calculate the real value of the goods, the fee is €90.55, including VAT. Other ancillary costs and taxes will normally take it up to circa €150.
However, some tasks can be based on a percentage of the total value of the property, such as Attestation immobilière/attestation de propriété - a certificate confirming the transfer of property to new owner(s). The figures are below (2022/3), to which VAT of 20% and ancillary costs should be added.
|Up to €6,500
|Between €6,500 - €17,000
|Between €17,000 - €30,000
You can read a fuller review of the process and charges for an Attestation immobilière/attestation de propriété in our Newsletter article at Inheritance and the Transfer of Property, as whether the charges are on the total value of the property or of the estate of the deceased depends on the circumstances.
The Déclaration de succession - preparation and submission of the inheritance tax declaration to the tax authority - is based on the gross value of the estate and on a 'sliced' basis, as follows, to which must be added VAT at the rate of 20% (2022/3).
|Up to €6,500
|Between €6,500 - €17,000
|Between €17,000 - €30,000
Where the notary draws up a declaration of inheritance including non-fixed assets which have been the subject of an auction, giving rise to the collection of a fee, no fee may be collected by the notary on the part of the gross assets corresponding to the auctioned value of this property.
Where the couple are married and they have entered into a French marriage contract, called the régime de communauté universelle, with the clause 'd’attribution intégrale', the surviving spouse automatically receives all of the estate, provided no assets have been specifically excluded from the contract. The same applies to those who have entered into a tontine contract.
Both contracts can assist in speeding up the whole process and reducing the cost, but as the surviving spouse or partner will normally wish the property to be transferred into their sole name (without which they could not sell), that will incur fees base on the total value of the assets held by the couple.
However, in accordance with Article 796-0 bis of the Code Code général des impôts no stamp duty (droits de mutation) is payable on transfer of real estate to a surviving spouse or civil partner, stating: 'Sont exonérés de droits de mutation par décès le conjoint survivant et le partenaire lié au défunt par un pacte civil de solidarité'.
Other assets (cash, house contents, vehicles etc) will also require that a déclaration de succession is carried out.
If there is a Will then a dépôt du testament will be necessary, unless it is already registered by the notaire.
The cost of such formalities will be based on small percentages of the value of the estate. As there are different rates for different aspects of the process you need to discuss with the notaire just how it is all going to add up.
If division of the estate cannot be completed within 12 months of death (not unusual) the beneficiaries could face a bill for both these actes notariés.
International owners frequently also consider it necessary to appoint their own legal advisor, particularly if there are also assets outside of France, whose costs are in addition to those of the notaire fees.
The process can take a long time, potentially years in some cases, due in some part to the complementary procedures that need to be taken in relation to assets and beneficiaries outside of France.
Although beneficiaries are directly responsible for dealing with the estate of the deceased it is possible to appoint an administrator.
Depending on the circumstances, three options are available.
If you think any of these options might apply to your circumstances you should discuss them with your notaire.
i. Exécuteur Testamentaire
First, it is possible for someone making a will to appoint an exécuteur testamentaire, although their role in the winding up of the estate is limited.
Recent legislation has increased the role and powers of this representative, notably in the absence of protected heirs, e.g. no surviving spouse or children.
So, if you have no immediate next of kin who will inherit your estate, the use of an exécuteur testamentaire might be an option worth considering.
ii. Mandataire Posthume
Second, in certain circumstances it is possible for you to nominate someone to manage the inheritance, a decision that you can make as part of the inheritance planning process. So, it is a decision made prior to death to the future benefit of inheritors and the estate.
The person(s) so nominated is called a mandataire posthume.
They may be one of the inheritors, a legal representative or notaire, or whomever you so choose.
The procedure is generally to be used in the presence of minors, handicapped persons or those otherwise unable to manage the process. It is not universally available, other than for a reason that is ‘serious and legitimate’.
iii. Mandataire Successoral
Thirdly, it is also possible for the inheritors to nominate one amongst them to manage the whole process.
The person is called un mandataire successoral.
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