Reader question: Do I have to tell the French taxman about an inheritance from overseas?
France has both strict laws on inheritance and high rates of inheritance tax for certain groups - but what's the situation if you live in France but receive an inheritance from another country?
Question: I live in France but a relative in the UK has recently died, leaving me their house. Do I have to tell the French tax authorities about this, and will I have to pay French inheritance tax?
If you are resident in France you will need to file the annual income tax declaration - even if you have no income in France. The declaration is a wide-ranging one and you are required to declare all of your global income.
Tax treaties mean that for most people you won't pay tax in France on income from overseas - but you still need to declare it.
But an inheritance is not the same as income, and confusion surrounds whether you have to pay tax on it in France.
In terms of making a declaration, if you have been a tax resident of France for six out of the last 10 years, then you will likely have to declare any foreign inheritance you receive. However, even if you have lived in France under that amount of time, it is still advised to verify with your local tax office about the declaration form. Typically, if required, it must be completed within 12 months.
Ultimately taxation comes down to tax treaties and whether the country where you received the inheritance has a tax treaty with France - which EU countries, the UK and the US all do.
If there is a tax treaty, then you will pay inheritance tax in the country where you receive the inheritance, based on local laws and tax rates. This means you would not therefore be liable for extra taxes in France.
You should also keep in mind if the deceased left you any property or assets in France, you may be taxed on those.
For those from countries that countries that have no tax treaty in place with France, you may need to declare the inheritance to French tax authorities - even if you don't have to pay tax on it and especially if the inheritance is more than €50,000. In this case you should check with your local tax office. You can find contact information and relevant forms here.
One thing to beware of for American readers is trusts.
In the US, trusts are a common financial vehicle for avoiding probate, but in France these are seen as tax avoidance schemes and becoming the beneficiary of a trust (either through inheritance or other means) is likely to cause you some problems with the French tax office - full details here.
It's therefore a good idea, if you have friends or relatives in the US who are likely to make you their heir, to talk to them in advance and explain that becoming the beneficiary of a trust is likely to make your life in France more complicated.
If you inherit a house outside France and decide to keep it and rent it out, you will need to declare the income from the rentals on your subsequent tax declarations.
If your country has a tax treaty with France you will likely not pay tax on your overseas rental income, although you may be liable for social charges on the income.
You can find full details on how French inheritance taxes work, and the laws around inheritance in France, HERE.
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Question: I live in France but a relative in the UK has recently died, leaving me their house. Do I have to tell the French tax authorities about this, and will I have to pay French inheritance tax?
If you are resident in France you will need to file the annual income tax declaration - even if you have no income in France. The declaration is a wide-ranging one and you are required to declare all of your global income.
Tax treaties mean that for most people you won't pay tax in France on income from overseas - but you still need to declare it.
But an inheritance is not the same as income, and confusion surrounds whether you have to pay tax on it in France.
In terms of making a declaration, if you have been a tax resident of France for six out of the last 10 years, then you will likely have to declare any foreign inheritance you receive. However, even if you have lived in France under that amount of time, it is still advised to verify with your local tax office about the declaration form. Typically, if required, it must be completed within 12 months.
Ultimately taxation comes down to tax treaties and whether the country where you received the inheritance has a tax treaty with France - which EU countries, the UK and the US all do.
If there is a tax treaty, then you will pay inheritance tax in the country where you receive the inheritance, based on local laws and tax rates. This means you would not therefore be liable for extra taxes in France.
You should also keep in mind if the deceased left you any property or assets in France, you may be taxed on those.
For those from countries that countries that have no tax treaty in place with France, you may need to declare the inheritance to French tax authorities - even if you don't have to pay tax on it and especially if the inheritance is more than €50,000. In this case you should check with your local tax office. You can find contact information and relevant forms here.
One thing to beware of for American readers is trusts.
In the US, trusts are a common financial vehicle for avoiding probate, but in France these are seen as tax avoidance schemes and becoming the beneficiary of a trust (either through inheritance or other means) is likely to cause you some problems with the French tax office - full details here.
It's therefore a good idea, if you have friends or relatives in the US who are likely to make you their heir, to talk to them in advance and explain that becoming the beneficiary of a trust is likely to make your life in France more complicated.
If you inherit a house outside France and decide to keep it and rent it out, you will need to declare the income from the rentals on your subsequent tax declarations.
If your country has a tax treaty with France you will likely not pay tax on your overseas rental income, although you may be liable for social charges on the income.
You can find full details on how French inheritance taxes work, and the laws around inheritance in France, HERE.
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