|
French Property News, November
2007
A new bill will have a positive effect
on inheritance, regardless of couples' marital
position.
It seems that not everyone in France was
relaxing this summer. The Palais Bourbon didn't close at the end of
June for its traditional summer break. The French Parliament was
also still at work. On 21 August 2007 it voted on a bill known as
TEPA which introduces various tax incentives and which will have a
significant impact on UK buyers or property owners in France.
equal partners
A major improvement has been made for couples,
whether married or not. Couples in a long-term relationship who
entered into a French pacte de solidarite (or UK civil partnership)
will be allowed to leave assets to the surviving spouse/partner
without being subject to any French inheritance tax.
Estates subject to French inheritance tax will
be exempt from French death duties when the beneficiary is the
surviving spouse/partner. (The PACS is an agreement registered
through the local civil court between long-term partners of the
same sex or not). The reversion of the French life interest (i.e.
usufuit) will also be tax exempt between spouses or partners.
Despite these new measures, people investing
in France still need to find out which structure (eg in one name or
both names, as individuals or through a company, with a tontine, a
marriage contract or en indivision, with an usufruit or a droit
d'usage ou d'habitation) is the most appropriate for their personal
circumstances. It remains essential to get advice before completion
in France, as modifying the title deed might prove to be expensive
if still possible at a later date.
Those who want to take advantage of these new
measures should adapt or vary their current titles or review their
wills. The signing of a French marriage contract still bears
significant advantages to those wishing to circumvent the impact of
the French statutory rules of inheritance and prepare the
settlement of their estate.
an end to sibling rivalry
The position has also changed between
siblings. In some cases a full inheritance tax exemption will apply
between siblings who have been living together. Otherwise the
inheritance or tax-free gift thresholds between siblings has
increased from €5,000 to €15,000.
life insurance bonds
The 20% tax applicable on death to sums paid
to the beneficiaries in execution of life insurance bonds
(assurances-Vie) will be cancelled where the beneficiary is the
surviving spouse or partner. As in the UK, the inheritance tax-free
thresholds and the tax bands will be indexed annually. The
first indexation will start on 1 January 2008.
tax thresholds for gifts
The inheritance or tax-free gift thresholds
between parents and children will increase from €50,000 to €150,000
per parent per child, whereas the general tax-free threshold
against the overall estate (ie €50,000) has been cancelled.
The tax-free gifts threshold to nephews or
nieces is now €7,500. Gift tax between partners who signed a PACS
agreement is the same as spouses.
Cash gifted to family members will be tax
exempt up to €30,000 where the donee is a child, a grandchild, a
great-grandchild or a nephew/niece in the absence of direct heirs.
The donor needs to be less than 65 years old and the donee over 18
(subject to conditions).
These rules will apply from 22 August and will
expand the possibilities of tax and estate planning concerning
French assets. This should be considered at the time of purchase
and when French wills are drafted.
For more information, please contact
Christophe Dutertre in Blake
Lapthorn's French Private Assets and Tax team
on 023 9253 0379; email christophe.dutertre@bllaw.co.uk.
|