French Inheritance Tax – Reliefs and Exemptions as at July 2017

Posted by Sarah Bogard

Senior Solicitor & Chartered Tax Adviser

French inheritance tax (IHT) reliefs and exemptions don’t always match those we are familiar with for UK IHT.

Purpose of this Article

To summarise the most common exemptions and reliefs available for French IHT and to highlight some similarities and differences with UK IHT.

This article doesn’t cover French gifts tax rules applying to transfers made during lifetime.

French Inheritance Tax – the Basics

We need to first set the scene.

French IHT is a charge on the beneficiaries of the estate, not on the estate itself. Each heir is responsible for his share of the IHT liability.

Each beneficiary gets a nil rate band allowance – abattement. The more closely related to the deceased person, the higher the abattement and the lower the scale of tax rates. See figures below (for 2017).


The bullet points below set out the beneficiary relationship to deceased, followed by the nil rate band allowance (NRBA) and the percentage this equates to in rates of IHT


  • Spouse, Civil Partner, and PACS partner*:    Fully exempt (although note lifetime gifts between spouses have a limited nil rate allowance of €80, 274): For lifetime gifts only : 5% to 45%
  • Ascendant or child**:  Nil rate band  €100,000:  = 5% to 45% rates of IHT
  • Sibling:  (NRBA)  €15,932  = 35% and 45% rates of IHT
  • Niece/nephew:  (NRBA)  €7,967 =  55% rates of IHT
  • Remoter relative:  (NRBA)  €1,594 = 60% rates of IHT
  • Unrelated (including stepchild):  (NRBA)  €1,594 =  60% rates of IHT
  • Beneficiary with qualifying mental or physical disability   (NRBA)  €159,325:  Dependent on relationship to deceased (see above)


*Pacte Civil de Solidarité – a type of cohabitation agreement between same sex or heterosexual couples

**Includes adopted, illegitimate and legitimated children



The spouse/civil partner exemption is only a full exemption on transfers on death – it is restricted on transfers made during lifetime. The exemption is allowed in full regardless of the residence or domicile status of each spouse/civil partner, whereas for UK IHT there is a limited exemption on a transfer from a UK-domiciled spouse/civil partner to a non-UK domiciled partner.

A person (who is single) living with his/her sibling for at least five years prior to inheriting, and either aged over 50 or unable to work due to illness can benefit from an exemption on inheritance on the sibling’s death.

It’s worth noting that the survivorship period for lifetime gifts using up in whole or part the nil rate allowance is currently 15 years, compared with the UK’s 7 years.

French IHT is payable within 6 months from the end of the month in which death occurred, where the death occurred in France, otherwise 12 months from the end of the month of death. Late payment attracts interest and, possibly, penalties.

As with UK IHT, there are limited options for requesting payment of IHT by instalments (with interest applying).

There is no transferable nil rate band allowance, as there is with UK IHT between spouses and civil partners. For example, if a child doesn’t use his nil rate allowance on the death of the first parent, it cannot be carried forward to be used on inheritance from the death of the surviving parent. It would be wasted.

The rules as to what assets are taxable depend on a number of factors, including the residence status of the deceased and the beneficiary, and the interaction with the Double Tax Treaties with France must be considered.

Exempt or partially exempt assets

Some assets in an estate are exempt or partially exempt from French IHT on transfer. Here are some of the more common assets ( this is not an exhaustive list):

  • Shares held in a business with an industrial, commercial, artisan or agricultural purpose may benefit up to 75% exemption. Qualifying conditions include length of ownership of the company prior to the transfer, guarantee of the beneficiaries to keep the assets for at least 4 years and continued exploitation of the business for at least 3 years. Failure to fulfil the conditions results in payment of the full IHT and late payment interest charges ;
  • Woods and forests benefit up to 75% exemption. Qualifying conditions include managing the land for 30 years, with a 10 yearly reporting obligation. Failure to comply results in the whole tax becoming due, plus a supplementary charge ;
  • Rural land with a long lease, or shares in a GFA (Groupement Fonciers Agricoles) benefit from a staged exemption (75% up to a certain value and then 50% thereafter). Again,  there are conditions relating to length of ownership and retention by the beneficiary;
  • Buildings and their contents of an historical interest benefit from a full exemption, on condition that the beneficiary keeps the items in the property, maintains them and gives access to the public. If the conditions are breached, IHT becomes due on the value of the assets at the date of death or date of breach, whichever is the greater value, plus interest from the date of breach;
  • Works of art or collections with historical or artistic value when bequeathed to the French State.

Gifts to charitable institutions

A gift to an institution in France which is considered to fulfil the requisite charitable status will be exempt from IHT. Many charitable objects mirror those that would qualify for the exemption in the UK.

However, until recently a gift to an institution outside of France would have been taxed at the highest rate of 60% (over €1,594). The law was changed in 2015 to provide that for deaths occurring from 31 December 2014 a gift to an institution situated in a state of the European Union or being a party to the agreement of the European Economic Area, having signed an agreement with France for administrative assistance to combat fraud and tax evasion, will qualify for a full exemption, but with the following conditions :

  • They have objects of a similar character to those set out in the French Tax Code (eg the protection of the environment or animals, or cultural, artistic and scientific objects for the public) ;
  • They are included on a public list of approved institutions or the institution provides the French tax authority with evidence to show the conditions of the Tax Code are fulfilled. All documents must be submitted in French.

This change in the relief was very much welcomed, but charitable institutions outside of France have an administrative task to fulfil to get the exemption.

Exempt estates due to the position of the deceased person

The estates of victims of war, victims of acts of terrorism or on the death of military, passing to certain relatives, are exempt from IHT. Also exempt are the estates of firemen, police and customs officers killed in service, again if passing to certain relatives.

Planning for the tax bill

Aside from getting professional advice on the best method of asset ownership, gifting and the structure of Wills to help minimise the French IHT bill – something which in many cases can help to save a significant amount of IHT - many people, particularly those who live in France, take out life cover known as assurance-vie.

A nomination of beneficiaries under such a policy can provide the beneficiaries with very favourable IHT reliefs. The rules are varied, depending on the age of the policyholder at the time premiums are paid, and the date when the contract was taken out, but in general, sums paid relative to premiums paid on a policy set up after November 1991 and whilst the policyholder was under the age of 70 benefit from an IHT exemption. For those paid after age 70, there is a nil rate allowance of €30,500 against all policies and divided between all beneficiaries, before IHT becomes payable.

There is also a levy – prélèvement spécifique – payable by each nominated beneficiary on his/her share of the policy over and above €152,500, at a rate of 20% up to €700,000 and 31.25% thereafter.

It is often the case that the tax charge on such a contract is significantly less than leaving a sum of money direct to a beneficiary.

The French ownership structure of usufruit can often help to minimise the IHT bill. An usufruit splits the ownership of an asset between the usufruitier  - the person who is granted the use of an asset (eg occupation of a property) and the receipt of all income deriving from it – and the nue-propriétaire – the person who has the right to the asset on the ending of the usufruit. Advice on the consequences of such an ownership split is crucial to ensure it is the right option to use.

In Summary

It would be unwise to assume that a UK tax exemption or relief will be mirrored in France. This is relevant for you if you intend to give an asset, you are leaving assets to someone in your Will, or you are a beneficiary with some connection with France, in the context of :

  • drafting Wills and getting advice on the French IHT position;
  • lifetime gifting;
  • setting up a trust; and
  • dealing with the administration of estates with some cross-border element.

For legal advice about French property, tax and estates speak to Sarah Bogard on 01227 763939 or email

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