French-Situs Assets: Tax Treatment in France and the UK

For UK expatriates, ownership of French-situs assets can create additional inheritance tax considerations. If you remain within the scope of the UK’s long-term residence (LTR) rules, your French assets may also be subject to UK inheritance tax, even after you have left the UK.

This article explains how French-situs assets are treated under French and UK inheritance tax rules, how the UK–France estate tax convention may provide relief from double taxation, and what to consider when incorporating these assets into your wider estate plan.

What Is a French-Situs Asset?

French-situs assets can include both movable and immovable property, such as:

• Real estate
• Bank accounts
• Shares in companies
• Art, vehicles, and furniture

While the location of physical assets is generally straightforward, the situs of bank accounts, company shares, and other intangible assets depends on the applicable tax rules.

An asset’s situs helps determine whether it falls within the French inheritance tax regime. French-situs assets may fall within the French inheritance tax regime regardless of your residence status, nationality, or place of death, although the precise treatment depends on the asset, the circumstances of the deceased and beneficiaries, and any applicable tax treaty.

Why Does an Asset’s Situs Matter for International Estate Planning?

For instance, your house in France generally falls within the scope of French inheritance tax, even if you are not resident or domiciled in France at the time of death.

French inheritance tax is not determined by situs alone. Depending on the circumstances, France may also tax assets outside France where the deceased was a French tax resident, or where a beneficiary meets certain French residence conditions. The UK–France estate tax convention can affect how these rules apply.

An asset’s situs is also one of the key determining factors for inheritance tax liability in the UK. If you are a long-term UK resident for IHT purposes when you pass away, the UK may impose tax on your worldwide assets, including those in France. Since French property may also be taxable in France due to its situs, the same asset can become exposed to taxation under both regimes.

How Do French Succession Law and Inheritance Tax Differ?

In the UK, inheritance tax is generally calculated on the taxable estate before it is distributed to beneficiaries, subject to applicable exemptions and reliefs. The French approach differs and requires consideration of two separate matters:

1. Succession law: It dictates who inherits an asset.
2. Inheritance tax: It determines how much tax each beneficiary owes.

French succession law provides for forced heirship (réserve héréditaire) where French law governs the succession. It reserves a fixed portion of the estate for children. The reserved portions depend on the number of children:

The remaining portion of your estate can generally be distributed according to your will. If there is no will, French law determines beneficiaries and the portions of the estate they can inherit.

French succession law does not automatically govern every estate involving French property.

Under the EU Succession Regulation, which applies in France, succession is generally governed by the law of the deceased’s habitual residence at death. A person may also elect the law of their nationality to govern their succession. A British national may therefore be able to elect the law of the relevant UK jurisdiction in their will, although certain French provisions protecting children may still need to be considered.

This choice of succession law does not, by itself, change the inheritance tax treatment of French assets.

Where French succession law applies, inheritance rights differ depending on your marital status and the family members who survive you. The general order of heirs includes:

1. Children
2. Parents
3. Siblings
4. Other relatives, including cousins, aunts, and uncles

The spouse’s entitlement depends on the heirs who survive you. For instance, where the deceased leaves children, the surviving spouse’s rights depend partly on whether the children are from the same marriage. If there are no children but surviving parents, the spouse may share the estate with those parents. Matrimonial property arrangements can also affect what forms part of the estate.

Under French intestacy rules, civil partners in a Pacte Civil de Solidarité (PACS) and unmarried partners do not automatically inherit. They may receive assets if provided for in a valid will, subject to applicable succession rules.

French inheritance tax is called droits de succession, often translated as succession tax. It is important to note that succession tax is not a separate charge.

How Does the French Inheritance Tax System Work? Rates, Thresholds, and Key Rules

The standard UK inheritance tax rate on the taxable estate is 40% (or 36% where the conditions for the reduced charitable giving rate are met). In France, inheritance tax rates range from 0% to 60%, depending on:

1. The beneficiary’s relationship to you
2. Availability of personal allowances or exemptions
3. The inherited portion of the estate

What Is the Personal Allowance for French Inheritance Tax Purposes?

French inheritance tax provides personal tax-free allowances (abattements personnels) and exemptions for eligible beneficiaries, with the exact treatment varying depending on the heir’s relationship to you:

• Spouse or Civil Solidarity Pact (Pacte Civil de Solidarité, PACS) partner: Fully exempt from French inheritance tax, regardless of the amount
• Child: €100,000 for each child from each parent
• Parent: €100,000
• Sibling: €15,932, with a full exemption possible where specific conditions are met
• Nephew or niece: €7,967, where eligible
• Grandchild: Generally €1,594 for inheritance purposes where no other allowance applies
• Others: Generally €1,594, where no other allowance applies
• Charitable organisations: Exempt where the organisation and transfer meet the relevant statutory conditions

The tax allowance generally becomes available again after 15 years. Relevant lifetime gifts received from the same donor during the preceding 15 years can reduce the allowance available on a subsequent gift or inheritance.

For instance, if you gift your child €70,000 and pass away within 15 years of making the gift, the child’s remaining €100,000 allowance would generally be €30,000, assuming no other relevant transfers or reliefs.

What Are French Inheritance Tax Rates?

French inheritance tax is personal; it is calculated based on the taxable amount each beneficiary receives, not the entire estate. The scale is progressive, and the applicable rate depends on the beneficiary’s relationship to you and the inherited amount.

Direct-line heirs (such as children and parents of the deceased) are entitled to the most favourable tax rates:

A child inherits a net taxable share of €116,000 from a parent and is liable for French inheritance tax. The child has not previously used their personal allowance against gifts from the same parent, so the first €100,000 is tax-free. Assuming no additional reliefs, the remaining €16,000 is subject to inheritance tax up to the fourth tranche, calculated as follows:

1. 5% inheritance tax on the first €8,072 = €403.60
2. 10% inheritance tax on €4,037 (€12,109 − €8,072) = €403.70
3. 15% inheritance tax on €3,823 (€15,932 − €12,109) = €573.45
4. 20% inheritance tax on the remaining €68 (€16,000 − €15,932) = €13.60

Total tax exposure is €1,394.35.

French inheritance tax rates differ for siblings, nieces and nephews, and non-relatives:

• Siblings: The first €24,430 after applying the tax-free allowance is taxed at 35%, with the remainder taxed at 45%. A full exemption may apply to qualifying siblings.
• Nieces and nephews: Generally taxed at 55% after applying the relevant allowance, unless special rules apply.
• Non-relatives: Generally taxed at 60% after applying the relevant allowance.

Can French-Situs Assets Be Liable for Inheritance Tax in Both France and the UK?

French-situs assets may be subject to French inheritance tax and may also be subject to UK IHT. Since the UK IHT regime now relies on long-term residence to determine the exposure of non-UK assets, a UK expat with LTR status may be liable for UK inheritance tax on worldwide assets, including those in France.

From 6 April 2025, an individual is generally considered a long-term UK resident for IHT purposes if they have been a UK tax resident for at least ten of the preceding 20 UK tax years, subject to transitional provisions and other statutory conditions.

Under these rules, relocation to France or another country does not necessarily remove your estate’s exposure to UK IHT immediately. You may remain within the LTR regime for a period after leaving the UK, commonly referred to as the post-departure “tail”.

The duration of the tail depends on your previous UK residence history and generally ranges from three to ten tax years.

For instance, if you have been a UK tax resident for 14 qualifying tax years within the relevant 20-year period, you would generally remain within the LTR rules for four tax years after becoming non-UK resident, subject to the applicable conditions and transitional rules.

During this period, French property and other non-UK assets may remain within the scope of UK IHT, even where you are no longer a UK tax resident.

How Does the UK-France Estate Tax Convention Resolve Double Taxation Issues?

To mitigate double taxation issues, France and the UK have signed an estate tax convention that defines how taxing rights are allocated and when relief may be available.

The convention uses its own domicile rules, which must be distinguished from the UK’s domestic LTR regime.

Under Article II, domicile for treaty purposes is determined by reference to the convention and the relevant domestic rules. Where the deceased is treated as domiciled in both countries for treaty purposes, tie-breaker criteria are applied in a specific order:

1. Permanent home (if there is one in each country, the convention considers the deceased’s centre of vital interests)
2. Habitual abode
3. Nationality

If these criteria do not resolve the position, the taxation authorities of the two countries determine the treaty domicile by mutual agreement.

The deceased’s domicile under the convention is relevant to how taxing rights are allocated, but it does not mean that the domicile country always has an unrestricted right to tax the entire estate.

The convention also contains specific rules governing where different assets are treated as situated and the circumstances in which each country may impose tax.

This distinction is particularly important following the UK’s move to the LTR regime. Being within the scope of UK IHT under domestic residence rules does not necessarily establish a UK domicile for treaty purposes.

What Are the Key Terms and Conditions of the UK-France Estate Tax Convention?

To address double taxation, the convention defines its own situs rules for different types of assets. These rules can differ from domestic classifications.

The convention helps address double taxation through rules that can restrict one country’s right to tax particular assets and, where applicable, provide credits for qualifying tax charged by the other country.

Where its conditions are met, credit may be available for qualifying tax charged by one country on assets also brought within the other country’s inheritance tax regime.

The credit is subject to the convention’s rules and is generally limited by the tax attributable to the relevant property. It does not necessarily eliminate every difference between the French and UK tax liabilities.

The convention applies to taxes arising on death and does not cover lifetime gifts, which must be assessed separately under the relevant domestic rules.

Where French assets are potentially taxable in both jurisdictions, the interaction between domestic inheritance tax rules and treaty provisions should be reviewed as part of your estate planning. Financial advisers at Titan Wealth International can help you assess your estate structure and identify areas requiring coordinated UK and French tax and legal advice.

What Should UK Expats With French-Situs Assets Consider in Estate Planning?

When reviewing your estate plan, consider the following:

• Understanding additional taxation of French-situs assets: French-situs assets may be subject to additional taxes beyond inheritance tax. For instance, you may be liable for French income tax on rental income from French property, regardless of your residence status. Selling French property may also expose you to capital gains tax and applicable social charges. These taxes operate independently of inheritance tax, with the precise treatment depending on your residence, property use, ownership structure and available reliefs.
• Reviewing ownership structures: Freehold or joint ownership, Société Civile Immobilière (SCI), and other ownership structures available in France offer different tax treatment, succession options, and levels of control. Periodically review the structures to ensure they suit your financial circumstances and long-term goals. An SCI does not automatically remove French inheritance tax exposure, and its treatment should also be considered under UK tax rules.
• Planning gifts: Lifetime gifting can be an efficient inheritance tax reduction strategy if you utilise available allowances and understand applicable time limits. Since French and UK gifting rules differ, careful cross-border planning is crucial. Gifts may also create immediate French tax liabilities, even where the UK treatment differs.
• Reviewing UK and French wills: Given the French forced heirship rules and the UK’s differing succession laws, reviewing wills in both countries is essential to avoid conflicts and ensure the intended asset distribution. Where separate wills are used, they should be coordinated to prevent unintended revocation or inconsistent provisions. The possibility of electing the law of nationality under the EU Succession Regulation should also be considered where appropriate.
• Reviewing trust arrangements: Trusts can have different tax and legal treatment in France and the UK. Where French assets are held through a trust, or a trust forms part of the wider estate plan, French inheritance tax, reporting requirements and UK IHT treatment should be reviewed together.
• Planning succession: UK expats who own a business should plan their company’s operational continuity, specifically focusing on selecting future leaders and revising the ownership structure. Where the business holds French assets, the ownership and succession arrangements should also be considered under the relevant French and UK rules.