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French Taxation

Civil Partnerships in France

Wednesday 15 July 2009

A UK civil partnership is now recognised in France, but do not assume that this now gets around all French inheritance laws.

Until recently, foreign civil partnerships were not recognised in France, and those in such a partnership were unable to then enter into a French civil partnership.

This ‘Catch 22’ meant that civil partnership couples from abroad received no relief on liability to French inheritance tax.

As a result, the surviving partner in a civil partnership has often faced a large bill for inheritance tax, sometimes requiring that the home of the couple be sold.

Thankfully, this sad state of affairs no longer applies for most couples, as France now recognises foreign civil partnerships.

Although we await detailed guidance from the French authorities as to the operational arrangements for the new law, France now recognises the law of the country where the partnership was registered, subject to the laws of France itself.

Accordingly, for civil partners from the UK this means that their civil partnership is now recognised in France, and they will be granted automatic exemption to inheritance taxes, as couples in a civil partnership in France benefit from this exemption.

The same should also apply to civil partners from other countries, although this may well depend on the terms of any tax treaty between France and the country concerned.

However, even where exemption from inheritance tax is granted, civil partners are still bound by the entrenched rights of children in French inheritance law.

This means that the surviving partner is obliged to share the proceeds of the inheritance with any children of the deceased.

If there is conflict between the children and the surviving partner, there is no easy solution to this problem, as it could result in the enforced sale of the property.

Civil partners only have a right to remain in the home for a year after the death of the deceased.

There are various solutions to the problem, notably through the purchase of the property ‘en tontine’. This clause means that the property passes entirely to the surviving partner, (although other assets would be distributed according to inheritance laws, or the will of the deceased if this was applicable).

However, a ‘tontine’ clause disenfranchises the children of the first deceased, as the property of the surviving partner passes entirely to their own children on their own death.

Accordingly, particularly where there are children from a previous relationship, the use of ‘tontine’ needs to be accompanied by other inheritance planning measures, such the use of a gift procedure.

You can read more in our comprehensive Guide to Inheritance Taxes in France.

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