U.K. Inheritance ! Is it liable to French taxes?

[les Favets]

Living in France full time, with a relation  in the U.K. who has passed away resulting in our inheriting money etc.,  Having paid the U.K. inheritance tax ( if any ) is it also subject to French inheritance taxes?

Les Favets

[Will]

It is a very complicated question, but where you pay inheritance tax depends on your tax domicile (as opposed to residence). If you still have property or family members in Britain you may (not necessarily will) be able to claim that you have retained UK domicile - assuming that you are British rather than American, Australian or anything else. If you have severed ties with Britain, then France will probably decide you are liable for French inheritance tax.

It would be a good idea to consult a tax specialist. Whatever you do, use advice like this from forums as a guide to things you should ask qualified professionals, not as a definitive answer.

[Gluestick]

As a general rule, IHT (Inheritance Tax), is paid by the Estate and not the Beneficiaries.

Thus bequests are paid by the Executor/s/Trix, from the gross estate once liquidated and the final value (which is the gross, less all legitimate costs, such as IHT  funeral costs, debts, mortgages on real property etc) is thereafter given to the beneficiaries, in accordance with the will.

Thus, at the point of delivery, there is no tax on an inheritance, from the perspective of the recipient. IHT is a Capital Tax, like CGT (Capital Gains Tax).

That said, the aspect of how the French Impôt deal with an inheritance under French Tax Law is another matter entirely!

As Will states, the further questions of Residence and Domicile, are critical to any such matter.

Seek independant, qualified professional assistance.

 

[les Favets]

So if the money is given to the beneficiaries in accordance to the will, does that then come under the heading of a gift and not subject to  inheritance tax ?

Les Favets

[Will]

Gifts in France are treated in much the same way as inheritance. So it is a very difficult tax to avoid.

[Gluestick]

[quote user="les Favets"]

So if the money is given to the beneficiaries in accordance to the will, does that then come under the heading of a gift and not subject to  inheritance tax ?

Les Favets

[/quote]

There is a common myth that "Gifts" can be freely given with no tax liability.

This is wholly wrong.

Certain gifts can be given outside of a person's tax liabilities: however, such are limited in value, normally.

What is taxed, free of tax and etc, varies from jurisdiction to jurisdiction.

In the UK, for example, a gift given outside the small "Tax Free" limit, where the giver becomes demised prior to Seven Years - generally - would be clawed back into the estate for tax. As would what is called "A gift with reservation/s", for example.

Any value received from an estate is a bequest: and not a gift.

Quite obviously, if the simple strategy of giving one's estate away prior to death as "A gift" avoided tax, then no one in their right minds would pay IHT!

In the UK, trusts, of varying sorts, are employed to negate/mitigate taxes and to order and preserve the ethos of a person's intent.

Trusts, however, are not recognised in France.

Seek qualified professional advice.

 

[bigears]

hi

this type of thing (monies coming to us down the line) was one of the factors that made us decide not to move to france full-time.  Take professional advice, make sure you have it in writing.  I hope it works out favourably for you. 

[ebaynut]

On page 78 of May 2007 Living France, Bill Blevins states in his article (and I quote) "that under the UK/France inheritance tax treaty, inheritances (but not gifts), from a UK domiciled deceased to a French resident recipient are not liable to succession tax in France (except for French property), even where the recipent has been resident in France for more than six years".

Best to read this link as it answers your question.

http://www.completefrance.com/cs/forums/3/814307/ShowPost.aspx#814307

[les Favets]

Thank you Ebaynut !!

Les Favets