Guide to French Inheritance Laws and Taxes

  1. Overview
  2. French Inheritance Laws
  3. French Inheritance Tax
  4. Inheritance Planning in France

3. French Inheritance Tax

  1. Resident or Non-Resident?
  2. How to Make a Declaration
  3. Calculation of Tax Liability
  4. Payment of Taxes

3.4. Payment of Taxes

Inheritance tax is known as the droits de succession and they are payable by the beneficiaries of the estate who are jointly and severally liable for the taxes.

Accordingly, the tax authority is able to demand full settlement of all of the taxes from any one of them.

In the past, beneficiaries were obliged to pay off the inheritance taxes within six months of determination of the estate. The period is extended to one-year where the deceased died outside of France.

This was clearly a problem for inheritors who may have inherited valuable fixed assets, but without cash funds to pay any taxes that may be due!

In recent years the problem has been exacerbated by the substantial growth in house prices in France, which sometimes meant that it was necessary to sell the family home in order to pay the taxes. However, some relief is available.

The tax authority is able to grant up to three years (ten years in the case of a business inheritance) to pay the taxes due, provided some form of guarantee can be offered, and on condition that at least 50% of the inheritance is in the form of non-cash assets. Nominal interest is charged on the outstanding sum. In 2023 the interest rate is 1.7%.

Where the non-cash assets are less than 50% of the inheritance, then the taxes are due within six months of determination of the estate.

It is only possible to defer payment of the taxes if you inherit the reversionary interest of the property. That is to say, if you own the nue-propriété.

This might occur for instance, where following the death of a spouse, the surviving spouse remains in the property with the life interest (usufruit) and the children own the reversionary interest.

That ownership structure is an approach frequently used to reduce inheritance tax.

Using this option, you can either elect to pay the interest only on the taxes due until death of the surviving spouse, or elect to pay no interest, but pay inheritance taxes on the whole value of the property. The rate of interest charged in 2023 is 1.7%.

You can find more information from an article published in our Newsletter at Paying French Inheritance Tax Bill.

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