by Madeleine McMullin

French inheritance laws and taxes are radically different from those in the UK, US and other English-speaking countries, and these differences should be taken into account before purchasing a property in France with your other half, whether you are married, in a civil union or simply living together.

Choice of Heirs

The first and biggest difference is that according to French inheritance law, if you have children and/ or are married, you are not free to choose your heirs, or at least not for the whole of your estate.

Children Must Inherit

Your children and possibly your spouse have a legal right to the greater part of your estate, unless the kids have tried to murder you or commit some other terrible crime and you go to court to disinherit them, but this rarely happens.  In the absence of children your parents may become heirs.

Civil Partners

Surviving partners in a Pacs (civil union) do not have to pay any inheritance tax, although they are not considered heirs unless specifically named in a will and do not have a legal right to inherit a part of the estate.  The surviving partner does have the right to stay in their main abode for one year free of charge.

Cohabiting/”Common Law” Partners

In France, the legal definition of a “concubin(e)” is simply a person with whom you are in a stable relationship, and  you can sign a declaration of “concubinage” which will give certain advantages such as rights to be considered as a “household” for the calculation of housing benefit.  However for inheritance purposes, unless you are married or pacs’ed you are treated as strangers with no legal inheritance rights and subject to the 60% tax band.

Choosing to Use the Laws of Your Country of Nationality

Since 2015, France has been a signatory to an EU law known as Brussels IV.  Under this law you can elect to have your estate distributed according to the laws prevailing in your country of nationality.  You need to have made a will that is legally valid in that country.  However a reform to the law has just been passed which stops people from countries where there is no forced heirship for children, from disinheriting their children.  It applies to French property, and is limited to cases where either the deceased or one of his/her children is a national of an EU state, or has his/her habitual residence in such a state.  This came into effect on 1st November 2021, but there have been challenges to the legality of certain aspects (See this article), and some lawyers are of the opinion that it could be challenged as contrary to the provisions of 650/2012 which is the Brussels IV law.   The law was aimed at nationals of countries with Sharia law, where girls routinely inherit less than their brothers, but will affect nationals of all countries, such as England, Wales and the USA where there is no forced heirship.

In addition it is worth noting that even if you can use your British will, inheritance tax on any French property will still be paid at French rates.   Here are a few examples with rates and information taken from the official French Notary site and Service-Public.fr :

Example 1

Bill (English) and Ben are an unmarried couple who live in France and own a house together.  Bill is divorced and has 2 children from his marriage.  According to French law when he dies, those children receive 2/3 of his estate, leaving him free to leave 1/3 to Ben, who then has to pay 60% inheritance tax on it after a measly €1594 (in 2021) tax free allowance.  This wouldn’t have been the case if they were married or in a civil union (“Pacs”) where Ben would have been able to inherit tax free.

Example 2

Jack and Jill are a married couple from Scotland who live in France and own a house together.  They have two kids together.  According to French law when Jack dies, Jill has the choice of either inheriting 1/4 of the estate immediately or enjoying the use of the house and property until she also dies at which point it will all go to the kids.  It is possible that as Scotland has forced heirship if the deceased is still domiciled (although not resident) in Scotland, that if Jack had elected to use Scottish law, Jill could inherit the whole of the house without paying anything, as there is no inheritance tax between spouses, but this needs to be tested.

Example 3

Peter and Jane are an English couple, in the same situation as Jack and Jill, except that in their case the situation is further complicated by the fact Jane has two children by a previous marriage.  Jane dies and Peter is left inheriting a quarter of her estate, with the rest divided between the 4 children.  Because there are step-children involved, Peter is not offered the choice to enjoy the use of the house for the rest of his life, he has to accept the quarter share.

Example 4

Janet and John are in a Pacs or civil union, they live in France and own a house together.  Neither of them has children and both of them were sensible enough to make a French will leaving their estate to the other.  When one or the other dies, the survivor inherits the whole estate without any inheritance tax.  If on the other hand, they had not made a will, neither of them would have stood to inherit anything, as the partner in a civil union does not automatically inherit, and the estate would have gone to siblings and other relatives.

Other Options

Usufruit

The use of a usufruct (usufruit in French) allows the use of the property and the benefit of any rents or income from it for as long as specified in the document (usually for life), but leaves the ownership of the bricks and mortar with the creator of the deed and his/her heirs.  If the “usufruitier” (beneficiary of the usufruct) wishes to sell and move elsewhere, he/she can only do so with the agreement of the owner(s) of the “nu-propriété”  and the proceeds of any sale are shared between them according to a set scale.  (See Notaire.fr for more information).

Form an SCI familiale

An SCI is a company specifically created for buying and managing property.  It is often used in France to buy properties, and can be used to manage the amount of inheritance tax paid.  It involves a certain amount of paperwork, such as AGMs, annual accounts, tax returns, and hence costs.  You need to be very careful about what you put in the statutes, but it is possible to get a notaire to draw them up in such a way as to grant the partner the use of the property until his/her death.

Buy “en Tontine”

Jointly owned French property is normally bought “en indivision” which basically equates to owning a 50% share each.  If you buy “en tontine”, then when one of the two owners dies the ownership passes to the other in full, as if the other owner had never existed.  This does NOT avoid the problem of inheritance tax for cohabiting couples which is still payable on the 50% share, unless it is a principal abode worth less than €76,000, and there are complications if you should fall out with your partner, as it can only be dissolved with the agreement of both.  (See Notaires.fr for more details).

Take Advice

It is therefore vitally important that you consider your position and your options before you purchase a property.  And if your situation is other than very straight forward, we can’t recommend strongly enough that you take professional advice from a notaire and/or accountant who is versed in both French and English inheritance law.

All information given in this article is in good faith, but we aren’t legal or tax experts and could have made a mistake, as noted above, please talk to legal and financial professionals before taking action based on it.