TRANSMISSION OF PATRIMONY TO THE FRENCH HEIR OF A NON-RESIDENT

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The ISF, but also the most classic international mobility, has led many French to settle abroad, mainly in Belgium, the United Kingdom and Switzerland, but also in Italy, Portugal and Morocco.

In an attempt to mitigate the consequences of their departure for public finances, at the end of 1999 the legislator modified the territoriality of free transfer rights (donation and inheritance) in order to submit to them their heirs who remained in France. Article 750 ter paragraph 3 in fact subjects beneficiaries residing in France who receive or inherit from a non-resident property located abroad.

Admittedly, this principle disappears in the presence of a tax convention but very few exist and even less apply with States which do not or very little tax on donations and inheritances. We can cite Italy with which France is linked by a tax treaty on donations and inheritances and which only taxes direct inheritances at 4% with a deductible of € 1 million, but for how long given the country’s political instability?

Switzerland, several cantons of which do not tax direct line inheritances, benefited from a convention applicable to inheritance, but its denunciation by France trapped the many French people living in Switzerland as well as many Swiss living in France.

However, if at least one of the heirs resides outside France, it is possible to organize the transmission of the family patrimony located outside France to or to French resident heirs at a lower tax cost.

Our firm has already implemented this type of solution and has a network of foreign correspondents for this.

Marc Bornhauser
mbornhauser@bornhauser-avocats.fr

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