Under French tax law, specifically Article 800 of the Code Général des Impôts, a tax resident in France is technically required to declare any inheritance they receive. It does not matter where the deceased lived or where the assets were held.
So if you inherit from a UK-based relative, and the money comes out of UK bank accounts or from the sale of UK property, you are supposed to tell the French tax office about it.
But here is the good news. Thanks to the UK–France inheritance tax convention, signed in 1963 and still in force after Brexit, there is usually no French tax to pay.
The convention says that where the deceased was a UK tax resident and the assets you inherit are located in the UK, France has no taxation rights. The UK system applies instead, which, as most people will know, often means no inheritance tax at all once the nil-rate bands and spouse exemptions have done their work.
So in most cases the declaration is a formality. Nobody is being cheated. No tax is due under the treaty, and no evasion or avoidance is going on.
However, there is one exception, and it is a significant one. If French property is involved, the position reverses completely, and French inheritance tax is very much in play. I will come back to that shortly.
Completing form 2705-SD
Assuming you situation is simple, with a UK-resident deceased and UK-based assets, the declaration itself is straightforward. It goes on form 2705-SD.
Before I go any further: this is not official guidance. I would wager that if you asked five French tax inspectors how this should be done, you would get five different answers, and possibly a sixth from one who changed his mind. What follows is the view of a tax consultant with a couple of decades of arguing with French tax offices behind him. Nothing more than that.
Simplicity works best. The form is far longer than your situation requires, and filling it out in full only invites questions nobody is asking.
Start on page two, at the bottom, under désignation du bénéficiaire. Put your name and your French address.
Then, after montant des dons ou donations, and enter the amount you received in euros.
Convert the amount at the currency rate on the day the funds arrived. Write the sterling figure next to it, along with the rate you used. If the inspector would rather use the Banque de France rate, and they usually would, you have handed them everything they need to adjust it themselves instead of writing to you about it.
In the blank space underneath, say that the inheritance is exempt under the UK–France treaty because the donor was a UK resident and the assets were UK-based.
Now the important part. Repeat that note at the very top of page one, above the form title, and point them to page two. A form that looks blank on its first page has a way of being filed as an error.
Do not be shy about it either. Bigger than the heading. If there is a fluorescent highlighter in the house, then its moment has arrived. I am not saying the tax office would overlook it. I am saying there is no prize for finding out.
You do not need to state the value of the whole estate, and you do not need to say what anyone else received. Your share is what is being declared. The rest is none of their business.
Post it by registered letter (lettre recommandée avec avis de réception). Where is says, référence client, write “Déclaration de succession.” Keep a copy as well as the return slip for your records.
None of this guarantees a quiet life. You may still get questions, corrections, or a letter telling you the form was never needed and you have wasted an afternoon. That depends on whoever is holding your file. What you will have is a dated record showing you did what French law asked of you, which is the whole point of the exercise.
French property is a different story
As mentioned before, if the person who died owned property in France and left it to you, France will tax it.
The principle behind this runs through nearly every tax treaty in existence: immovable property is taxed where it stands. The UK–France convention confirms it. Where the deceased lived does not matter. Where you live does not matter. The building is in France.
What you actually pay depends on how you were related to the deceased and what the property is worth. French inheritance tax rates climb steeply as the family connection weakens, and a nephew is treated very differently from a child.
This is worth a conversation before anything gets filed, because the numbers can be quite substantial and there is rather more at stake than a formality.
One practical trap. The French property will be dealt with and declared by the notaire handling the estate, so that part is in hand. But the notaire’s interest stops at the French assets. Anything non-French in the same estate may well be left to you, and I have lost count of the number of people who assumed the notaire had covered everything. So it is worth making a point of asking him.
If you are not British
Everything above assumes you are dealing with the UK–France convention. There are many people living in France for whom this does not apply too.
If you inherit from a relative in Ireland, the Netherlands, Germany, Denmark, Norway, Sweden, Belgium or Australia, you are asking the same two things. Does France have a taxing right, and what does the relevant treaty do about it?
The answers vary a great deal. France has inheritance tax treaties with a fair number of countries, but the network is much patchier than the income tax one, and some nationalities living here have no inheritance treaty protection at all. Where there is no treaty, French domestic law takes over, and Article 750 ter of the CGI can pull foreign assets into the charge based on your residence in France alone.
The two constants are that French real estate is taxed in France whatever the treaty says, and that Article 800 applies to you because you are resident here, whatever the estate looks like. What changes is the relief.
That is why an Irish or Danish beneficiary can get a completely different answer from a British one on identical facts, and why it pays to check your own treaty position rather than borrowing your neighbour’s conclusion.
Keeping this in proportion
The penalties in this area exist to catch evasion and fraud. Nobody is coming after someone who received a treaty-exempt legacy and made a hash of the paperwork. Where no tax is due, the French state has lost nothing, and the people administering this understand perfectly well that the treaty outranks their domestic law.
So do not lie awake over a few hundred pounds from Aunt Mavis’s old Nationwide account. France will survive without it.
How Kentingtons can help
An inheritance rarely turns up on its own. It changes what you own, often changes your tax position, and raises questions about how the money should be held, what happens to it on your own death, and whether the way your affairs are arranged still makes sense.
That is the work we do. If you have received an inheritance from abroad, or you expect to, we are happy to look at where it leaves you.