Introduction to French inheritance rules for non-residents
France applies specific taxation on inheritances, which concerns both residents and non-residents. For foreigners holding assets in France, understanding the rules of inheritance tax is crucial to anticipate the fiscal impact and optimize their estate transmission. According to Article 750 ter of the General Tax Code (CGI), assets located in France are subject to French inheritance tax, regardless of the deceased's tax domicile (source: AMF, General Tax Code).
Scope of inheritance tax for non-residents
Since the 2011 reform, only assets located in France are taxable for inheritance duties for non-residents. The deceased's tax domicile is determined according to the criteria of Article 4 B of the CGI, but for inheritances, taxation applies to:
Real estate located in France
Shares in companies whose assets are mainly French real estate (more than 50%)
Bank accounts, financial securities, and other assets located in France
Movable assets located outside France are, in principle, not subject to French inheritance tax for non-residents (source: INSEE, Taxation Report 2023).
Inheritance tax scale according to degree of kinship
Inheritance duties in France are calculated on the net share received by each heir, after applying a specific allowance. The progressive scale varies significantly depending on the degree of kinship with the deceased:
Degree of kinship
Allowance (€)
Tax brackets (%)
Maximum tax rate (%)
Children (direct line heirs)
100,000
5% up to €8,072, then 10%, 15%, 20%, 30%, 40%, 45%
45%
Brothers and sisters
15,932
35% up to €24,430, then 45%
45%
Nephews/nieces
7,967
55%
55%
Other heirs (no kinship)
0
60%
60%
These rates apply after deduction of allowances, which are personal and non-cumulative (source: General Tax Code, Article 777 and following).
Impact of international tax treaties
France has signed several bilateral tax treaties regarding inheritances to avoid double taxation. These treaties may provide for:
The allocation of taxing rights between France and the country of residence of the deceased or heir
Recognition of allowances and tax credits
Specific provisions for certain types of assets
For example, the Franco-Swiss treaty stipulates that real estate located in France remains taxable in France, but other assets may be taxed in the country of residence (source: Franco-Swiss Tax Treaty, 2014).
Note that France does not have treaties with all countries, which can lead to double taxation. In the absence of a treaty, the general rule applies, and double taxation is possible (source: Banque de France, Tax Report 2022).
Practical strategies to reduce tax exposure
Non-residents can implement several strategies to optimize the transmission of their assets located in France:
1. Use of allowances and early gifts
Donations benefit from the same allowances as inheritances, renewable every 15 years. For example, a parent can give up to €100,000 per child without gift tax. This strategy reduces the taxable base at the time of death (source: INSEE, Wealth Taxation 2023).
2. Structuring via real estate civil companies (SCI)
Holding real estate assets through an SCI allows the transmission of shares rather than the property directly. Shares can be valued with a discount, and transmissions can be spread over time (source: Bloomberg, Wealth Analysis 2023).
3. Tax residence and choice of domicile
Changing tax residence before death can influence inheritance taxation, especially if a tax treaty is in place. However, this strategy must be handled carefully and under legal advice, as France may consider the main economic interests (source: AMF, International Tax Guide 2023).
4. Life insurance
Life insurance contracts subscribed in France benefit from a specific tax regime. Capital transmitted outside the estate may be exempt or subject to a favorable flat tax, depending on the age at payment (source: Insurance Code, Article L132-12).
Case studies and numerical illustrations
Consider a non-resident owning real estate in France valued at 1 million euros, transmitted to:
A child: after a €100,000 allowance, the taxable base is €900,000. Inheritance tax will be calculated according to the progressive scale, approximately €300,000 (30%).
A nephew: no allowance, taxation is 60% on €1 million, i.e. €600,000 in duties.
An unrelated third party: 60% of €1 million, also €600,000.
In this context, anticipating transmission via gift or life insurance can significantly reduce taxation (source: AMF Simulation 2023).
Conclusion: verdict for foreign investors
French inheritance tax is particularly heavy for non-residents, especially without direct family ties, with rates reaching up to 60%. Knowledge of specific rules, notably allowances and international tax treaties, is essential to control tax exposure.
It is strongly recommended that foreign investors holding assets in France:
Consult a tax expert specialized in international taxation
Implement proactive estate planning (gifts, life insurance, SCI)
Verify applicable tax treaties between France and their country of residence
These steps allow substantial reduction of inheritance duties and avoidance of double taxation, thus ensuring more efficient estate transmission.
