French Inheritance Tax for British Expats: Allowances, Family Rules, and Cross-Border Estates Explained

French inheritance tax (droits de succession) operates on principles that differ entirely from the UK system. Instead of taxing the estate as a single amount, France looks at who receives the money, where they live, and the way the family is legally arranged. The guide describes how these rules work in real family situations and examines how international agreements may protect—or modify—your inheritance.

1. How is inheritance tax handled in France?

Unlike the UK, where inheritance tax (IHT) is charged on the deceased's entire estate before it is distributed, in France inheritance tax is assessed on a case-by-case basis for each beneficiary.

To work out the specific tax liability when an estate is settled, one must consider three separate factors for each recipient:

• Your family relationship determines both your tax-free amount and the progressive tax rates that apply to your portion.
• Each person is given a tax-free amount which is determined entirely by their relationship category.
• The 'Fiscal Recall' Rule (Rappel Fiscal): when a person dies, France examines any gifts made during their lifetime to that particular beneficiary over the 15 years before death; any allowance that has been used during that period is deducted from the tax-free allowance available at the time of death.

2. Which allowances and exemptions apply?

In French tax law, it is important to distinguish between a tax exemption (no tax is payable regardless of the amount) and a tax allowance (which provides a tax-free amount up to a certain financial limit).

French Inheritance Tax Allowances and Rates

• Spouse / PACS partner: exempt from inheritance tax (at a rate of 0%).
• For each child, there is an allowance of €100,000; progressive tax rates ranging from 5% to 45% are applied to any amount exceeding this.
• For grandchildren: €1,594 (but if they formally act as representatives of a deceased parent, they receive the parent's €100,000 allowance). The rates increase from 5% to 45%.
• The allowance for siblings is €15,932 (and may be fully exempt if strict conditions on age, chronic illness, and continuous cohabitation with the deceased are met). The rates range from 35% to 45%.
• Nieces and nephews: an allowance of €7,967, after which a flat tax rate of 55% applies.
• For unmarried partners and beneficiaries who are not related, the allowance is €1,594 and then a flat tax rate of 60% applies.

It should be noted that disabled beneficiaries who can demonstrate that their infirmity stops them from working under normal conditions may be entitled to an extra specific allowance of €159,325, provided that it has been subject to both medical and administrative verification.

3. Does France impose different taxes on British nationals?

Far from nationality alone determining your outcome regarding French inheritance tax, the French tax authorities take into account three specific geographic and residential factors rather than the passport you possess:

1. The tax status of the deceased: According to Article 750 of the French General Tax Code (Code général des impôts - CGI), if the deceased was a tax resident of France at the time of their death, France has the right to tax their entire estate worldwide on the basis of international treaties.
2. The tax residence status of the beneficiary means that if the heir has been a tax resident of France for at least six out of the ten years before death, then all the assets they inherit will be subject to French tax. This rule applies even if the deceased lived entirely abroad and the assets are located outside France.
3. If a non-resident dies and leaves physical property, land, or other tangible assets in France, that asset is always subject to French tax, no matter where the deceased or the heirs reside.

4. What happens when the estate includes assets in both the UK and France?

If property is situated on both sides of the English Channel, you cannot make use of the usual income tax treaties and must instead rely on a special bilateral agreement to avoid double taxation: the France–UK Inheritance Tax Convention of 21 June 1963.

The treaty eliminates double taxation using strict location (situs) and tax credit mechanisms:

• Property that cannot be moved (real estate): the country where the land is situated taxes real estate; thus, France taxes a house located in France, and the UK taxes one located in the UK.
• The system of tax credits: provides that if the deceased was a resident of France, France will calculate tax on their worldwide assets; but, pursuant to the treaty, if an asset situated in the UK (for example, British shares or real estate) is liable to UK IHT, France will give a tax credit equal to the UK tax paid, this credit being capped at the amount of French tax due on that particular asset.
• Important caveat: the 1963 treaty provides no exemption for lifetime gifts. If you give up UK assets while living in France, you will be subject to French domestic gift tax and will not benefit from the treaty.

Regarding changes in the UK: after the UK changed its domestic tax laws by introducing a 10-year long-term residence test for inheritance tax, British expats will still be liable for UK IHT on their global assets for up to ten years after relocating to France. As a result, coordinating treaty credits between the two countries has become more important than ever.

5. Does the law of succession in France decide who inherits?

There is an important legal difference between Succession Law (which determines who has the legal right to receive your property) and Inheritance Tax (which relates to how much the government takes from the people who receive it).

France has a civil law system which includes forced heirship (la réserve héréditaire). This rule means a certain percentage of your estate must go to your biological or adopted children, so you cannot easily disinherit them in a typical French Will.

• The European Union Succession Regulation (No 650/2012) provides that, upon death, the law used to determine the distribution of your estate is generally that of the country in which you normally reside. However, it allows foreigners to expressly choose in their Will the law of their nationality (for example, English law) to apply to their entire estate.
• From a tax perspective, although a British citizen can choose to apply English law to their Will to avoid the rule of forced heirship and leave all their assets to a surviving spouse, this choice affects the civil rules of distribution, not the tax rates. If English law lets you leave your assets to an unmarried stepchild, France will acknowledge the distribution but will still apply a 60% flat tax rate to that stepchild's share.
• A 2021 French law also allows children to claim 'compensatory rights' against French assets when they are excluded by an election made under a foreign law, creating a complex legal conflict that requires review by cross-border professionals.

6. How are property, investments, and insurance treated?

Different asset classes follow unique assessment, valuation, and optimisation paths under French rules:

• French real estate is subject to taxation based on its fair market value on the date of death; if it is the principal family home and the surviving spouse or children continue to live in it, a deduction of 20% from the taxable value may be claimed.
• If the deceased was a resident in France, property in the UK and abroad must be declared in the French declaration. The valuation must be based on French market assessment standards; double taxation is reduced by means of the credit provided under the 1963 treaty.
• UK bank accounts and investment portfolios—this includes ISAs, which lose their tax-free status the moment a person becomes a French tax resident—are fully subject to reporting and taxation in France if the deceased was a French resident.
• Assurance Vie Policies: They remain one of the most effective tools for expatriate tax planning. Assets held in a compliant Assurance Vie are subject to a different tax system from the usual estate (hors succession). If the premiums are paid before the policyholder reaches the age of 70, each named beneficiary can receive up to €152,500 without having to pay any tax, and a flat tax rate applies when this amount is exceeded. If premiums are paid after age 70, beneficiaries have a considerably lower joint tax-free amount of €30,500.

7. Can gifts donated over a lifetime affect the calculation?

Tax allowances can be used through lifetime gifts (donations); careful planning is necessary to avoid unforeseen pitfalls.

• The French tax law includes a provision known as the 15-Year Renewal: This allows people to renew their personal gift tax exemptions every 15 years; for instance, a parent can give their child €100,000 tax-free now and, provided that the parent lives for another 15 years, the child will at that time be entitled to an additional full €100,000 exemption on the parent's death.
• Reporting Requirements: A gift, even if it consists entirely of non-French assets (for example, cash transferred from a UK bank account to an heir living in France), must still be officially declared to the French tax authorities (FISC) using the appropriate forms. If the heir does not report a personal gift (don manuel), they may face significant penalties and an unexpected retroactive tax bill when the estate is finally settled.

8. Case Studies: How the Rules Play Out in Real Life

Case Study 1: The Family Home & Blended Family

• The Current Scenario: Martin and Sarah are a British married couple living permanently as tax residents in France. They jointly own their family home, which is currently worth €500,000. Martin has two adult children from a previous relationship; Sarah has no biological children.
• The Future Inheritance Analysis: If Martin passes away first and leaves his share of the property to Sarah, Sarah is fully exempt from French inheritance tax as his surviving spouse. However, a significant tax trap occurs later. When Sarah eventually passes away and leaves the property to Martin’s children, French tax law treats them as unrelated stepchildren.
  
  • They will not qualify for the standard €100,000 direct-line child allowance.
  • Instead, they will receive a minimal allowance of just €1,594.
  • They will then face a crushing 60% flat tax rate on the entire remaining value of the home.
• Key Advisory Questions: Can a specialised civil structure (such as a tontine clause), a specific amendment to their marriage contract, or a cross-border assurance vie policy wrapper alter the tax status of the stepchildren to protect their future inheritance?

Case Study 2: The Cross-Border Estate

• The Current Scenario: Jean-Pierre is a retired expat living permanently as a tax resident in France. He currently owns a house in France (worth €400,000) and keeps savings in UK bank accounts (£150,000). His two adult children live and work permanently in the UK.

• The Future Inheritance Analysis: Because Jean-Pierre is a tax resident of France, the day he passes away, his entire global estate must be declared to the French tax administration (FISC).
  
  • His children will split the French property and the UK savings.
  • Each child will receive a €100,000 tax-free allowance against their total inherited share.
  • For the UK-based savings, the 1963 bilateral treaty allows the UK to assess tax first based on location. France will then calculate its tax but grant a corresponding tax credit to prevent double taxation.
• Key Advisory Questions: How does the UK's 10-year residency window affect his estate if Jean-Pierre only recently relocated from London? Are his UK bank accounts structured correctly to prevent UK banks from freezing them while his future executors wait for a French tax clearance certificate (certificat de non-imposition)?

Case Study 3: The Unmarried Couple

• The Current Scenario: David and Emma are a British couple who have lived together in France for 12 years. They are not married and have never entered into a civil partnership (PACS). They assume that having lived together for over a decade, they have the same legal protections as a married couple.
• The Future Inheritance Analysis: French law does not recognise common-law marriage, regardless of how long a couple has lived together. In the eyes of the French tax office, David and Emma are viewed as legal strangers.
  
  • If David passes away and leaves his share of their jointly owned French property to Emma via a Will, Emma receives absolutely no spousal tax exemption.
  • She will be granted a tiny tax-free allowance of only €1,594.
  • She will face an immediate 60% flat tax rate on the entire value of the property she inherits from him.
• Key Advisory Questions: Should the couple look into entering a French PACS (civil partnership) combined with a robust French Will to secure the 0% spousal inheritance tax exemption right away? What are the potential retroactive risks associated with their past lifetime transfers of assets?

‍

9. Practical Expat Checklist: Actions to Take Now

To protect your family against administrative friction and harsh tax rates, you should have a cross-border wealth professional look over these five operational areas:

• Check your Will to ensure it includes an explicit choice-of-law clause that selects the law of your nationality, as set out in the EU Succession Regulation, to address forced heirship.
• When considering beneficiary relationships, examine the legal ties between you and your intended heirs. For stepchildren or an unmarried partner, consider the appropriate arrangements to reduce the 60% tax rate.
• Assess the way in which your French property is owned (for example, whether it is held en indivision or en tontine) and determine if a family property company (Société Civile Immobilière - SCI) is suitable.
• For Audit Insurance & Assurance Vie, ensure any assurance vie policies are funded before age 70 and confirm the beneficiary clauses (clause bénéficiaire) align with your overall estate plan.
• When documenting prior gifts, keep a clear record of all gifts made in the last 15 years to remain in compliance with the French fiscal recall timetable.

Frequently Asked Questions: Assurance Vie & French Inheritance Tax

1. Does an Assurance Vie policy completely bypass French inheritance tax?

Not automatically, but it provides massive tax-free allowances. Assets held within a compliant Assurance Vie are treated as separate from your standard estate (hors succession). If you pay your premiums into the policy before you turn 70, you can name any beneficiary you want—including unrelated partners or stepchildren—and they can receive up to €152,500 entirely tax-free. Amounts above this threshold face a flat tax rate of 20% (up to €700,000) rather than the standard 60% unrelated tax rate.

2. What happens if I fund an Assurance Vie policy after reaching age 70?

The tax benefits are reduced, but they still remain highly valuable. For premiums paid after the age of 70, your beneficiaries share a single, collective tax-free allowance of €30,500 across the entire policy. Any growth or investment gains on those post-70 premiums remain 100% tax-free upon your passing. The remaining original capital above the €30,500 limit is taxed at the beneficiary’s standard relationship rate, but it still bypasses France’s strict forced heirship rules.

3. Can I keep my existing UK investment bonds, or should I open a French Assurance Vie?

You should almost always look into transitioning to a French-compliant policy. Standard UK investment bonds or ISAs don't offer the same tax advantages in France. If you remain a French tax resident, holding a non-compliant UK wrapper means the French tax office (FISC) can tax your global income and gains annually. Upon death, those UK assets will be subjected to standard French inheritance tax rates without access to the generous €152,500 individual tax-free allowances.

Article Limitations & Disclaimer

This website and the article are provided for educational and informational use only and should not in any way be regarded as an offer, incentive, or suggestion to invest. Since cross-border estate planning is based on highly individual circumstances and involves interactions between international treaties, changing regional laws, and private family arrangements, it does not amount to formal legal or financial advice. You should seek advice from a qualified international notary (notaire) or a cross-border tax specialist certified in both UK and French law before making any Wills, reorganising your assets, or filing your taxes.

Primary Source & Official Guidance References

• The official guidelines on international estate territoriality issued by the French Tax Administration can be found on the BOFiP Portal.
• The Bilateral Treaty: For a full version of the 1963 treaty, see the UK Government's GOV.UK Double Taxation Relief Manual.
• For non-resident estates, it is necessary to examine the compliance steps and deadlines applicable to cross-border successions via the Direction des Impôts des Non-Résidents (DINR).

Regulatory Compliance Notice

AXIS Financial Consultants is an authorised Courtier d'Assurance and Financial Investment Advisor in France (ORIAS number 17 003 701; ANACOFI-CIF code E009199) and is supervised by the ACPR and AMF. Its registered office is at 374 Avenue de la Gaule, Île de la Dérivation, 78955 Carrières-sous-Poissy, France.

‍