Franco-British Tax Convention on Succession
The Franco-British tax convention on successions regulates the tax treatment of successions connected with France and the United Kingdom. The main purpose of the Act is to prevent the same assets transferred as a result of death being imposed twice by both States.
Signed on 21 June 1963 and entered into force on 30 June 1964, this Convention specifically concerns inheritance rights. It must therefore be distinguished from the tax convention applicable to income and capital gains.
In particular, an international succession may raise difficulties when the deceased resided in one country while holding property in the other, where the heirs live abroad or where the estate includes real, financial or professional assets distributed between France and the United Kingdom.
Why is there an inheritance tax treaty between France and the United Kingdom?
The French and British rules may each provide for the imposition of an estate according to the domicile of the deceased, the situation of the property or the location of the heirs.
In some situations, the two States could therefore claim a right to impose all or part of the same heritage.
The purpose of the Franco-British tax convention is to:
- prevent double taxation of inheritance rights;
- determine the tax domicile of the deceased for the purposes of the Convention;
- establish location rules for the different categories of goods;
- organise the charging of duties paid in one State against those due in the other;
- facilitate trade between French and British tax administrations.
Who is concerned by the Franco-British tax convention on inheritances?
The Convention may in particular concern situations in which:
- the deceased was domiciled in France and held property in the United Kingdom;
- the deceased was domiciled in the United Kingdom and owned property in France;
- the heirs reside in a country different from that of the deceased;
- the estate includes real estate situated in France or the United Kingdom;
- assets include shares, receivables, insurance contracts or professional assets in both countries;
- the deceased could be considered domiciled in both States;
- inheritance rights are claimed simultaneously by the French and British administrations.
Each estate must be examined in terms of its composition, the domicile of the deceased and the location of the assets concerned.
The main stakes of the France–United Kingdom estate agreement
The Convention deals in particular with the determination of the domicile of the deceased. Where a person can be considered to be domiciled in both countries, it provides for several successive criteria, including the permanent home, the centre of vital interests, the usual place of residence and nationality.
It also contains rules for determining in which State the property is deemed to be situated. The answer may vary depending on whether:
- real estate;
- an account or debt;
- shares or shares;
- a contract of insurance;
- intellectual property rights;
- a professional asset;
- participation in a civil society or partnership.
In particular, buildings are considered to be situated in the State in which they are located, while the location of certain movable property depends on the domicile of the deceased or the place of incorporation of the company concerned.
How does the convention avoid double taxation?
Where the same property bears inheritance rights in both States, the Convention provides for an imputation mechanism.
The State of the deceased's domicile may thus grant a credit corresponding to the duties paid in the other State, within the limits of the tax applicable to the property concerned.
However, the application of this mechanism requires the proper identification of:
- the domicile of the deceased within the meaning of the Convention;
- the nature and location of each asset;
- the State having the main right to impose;
- the amount of duties actually paid abroad;
- the time limits for applications for imputation or reimbursement.
Why call on an international tax lawyer?
A Franco-British succession requires the coordination of two different tax systems, as well as the rules specific to the civil settlement of the succession.
Edward Pruvost's practice supports individuals and families facing international estate issues, including:
- determining the tax domicile of the deceased;
- analysis of the Franco-British tax convention;
- succession involving property situated in both countries;
- calculation and prevention of double taxation;
- transfer of real or financial assets;
- regularization of estate declarations;
- trade with the tax administration;
- succession rights litigation.
Each case is analysed individually taking into account the family situation, the composition of the assets and the rules applicable in each of the two States.
Consult the official tax convention
The official text of the Convention between France and the United Kingdom on the avoidance of double taxation on inheritance rights is available on the French tax administration's website.
See the Franco-British Tax Convention on Succession:
Be accompanied for a French-British succession
The tax convention lays down the principles for allocating the right to tax between France and the United Kingdom. However, their application depends on the domicile of the deceased, the nature of the property transferred, its location and the fees already paid in each of the two countries.
Édouard Pruvost's law firm assists you in the analysis and tax settlement of French-British estates in order to secure declarations, anticipate the risks of double taxation and defend the interests of heirs.
