FRANCE Law and Practice Contributed by: Elodie Mulon, Jennifer Tervil, Romane Lemaitre and Emmanuelle Bonboire-Barthélémy, Chauveau Mulon & Associés
Chauveau Mulon & Associés 27 rue Duret 75116 Paris France Tel: +33 014 268 2424 Email: cabinet@cm-associes.com Web: www.cm-associes.com
1. Tax 1.1 Tax Regimes
• Exemptions based on the status of the deceased or the beneficiary, whether natural or legal persons. These include: (a) the surviving spouse or civil partner (PACS) (Article 796-0 bis of the French Tax Code); (b) siblings who lived with the deceased and suffer from a disability (Article 796-0 ter of the French Tax Code); and (c) public or public-interest bodies with a rec - ognised general interest mission, particularly with respect to donations or bequests made to them (Article 795, 2° of the French Tax Code). • Partial exemptions granted based on the nature of the assets transferred, such as works of art, books, collectibles, and historically or artistically signifi - cant documents, as well as woodland and forestry assets. • Partial exemptions applicable in the event of the transfer of a sole proprietorship or family business. • Special regimes linked to the legal nature of the testamentary disposition, including: (a) gradual and residual gifts (Article 784 C of the French Tax Code); (b) renunciation of succession (Article 756 bis); (c) limited acceptance or partial allocation of the estate ( cantonnement ) (Article 788 bis); and (d) reversion of usufruct clauses (Article 796-0 quater). Additional exemptions may apply in specific cases. For example, the statutory right of reversion ( droit de retour légal ) in favour of the deceased’s parents is fully exempt from transfer duties, regardless of whether it is exercised in kind or in value (Article 763 of the French Tax Code).
Transfer duties ( droits de mutation à titre gratuit ) are payable on all transfers of assets upon gift or death, regardless of whether the transmission results from intestate succession or from testamentary disposi - tions granted by the deceased. The applicable rate is calculated according to a pro - gressive scale, based on the net value of the estate (or of the gifts and legacies), as determined under French civil law, and the degree of kinship between the deceased (or donor) and the heir (or donee). The closer the familial relationship, the lower the applica - ble rate ‒ as provided by Article 777 of the French Tax Code (for instance, up to 45% in direct line and 60% between unrelated persons). This rate applies to the net share received by each heir or donee, after the deduction of any applicable tax allowances. In addition, the division of an estate, whether it involves movable or immovable property, is subject to a registration duty or land registration tax ‒ referred to as partition duty ‒ generally levied at a rate of 2.5% on the net value of the assets divided (Articles 746 and 747 of the French Tax Code). Taxation of trusts, foundations, and similar estate planning instruments are addressed in the sections that follow. 1.2 Exemptions With respect to transfer duties ( droits de mutation à titre gratuit ),there are four main categories of exemp - tions.
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