Have there been any notable recent developments in the provision of private client and offshore services in your jurisdiction, including any regulatory changes or case law?
The tax on immovable property replaces the solidarity tax on wealth. From January 1 2018 the solidarity tax on wealth was replaced by the real estate wealth tax. Financial assets (eg, cash, shares and options) and other movable assets and goods are outside the scope of the real estate wealth tax.
The French tax bill for 2018 created a new flat withholding tax which applies to investment income from 2018. The overall rate of the tax is 30%, which includes income tax at 12.8% and social taxes amounting to 17.2%.
On July 13 2017 the National Assembly decided to delay the application of the general payroll withholding tax system for a year (until 2019 instead of January 1 2018 as initially planned).
Residence and domicile
How is residence/domicile determined for tax liability purposes in your jurisdiction?
Under Article 4B of the French Tax Code, an individual may qualify as a French tax resident if any of the following criteria are fulfilled:
- He or she has his or her home in France or has a principal place of abode in France. ‘Home’ is defined as being a place where a taxpayer generally lives, that is his or her habitual place of residence, provided that such a place of residence has a permanent aspect. Whereas, ‘principal place of abode’ refers to the country in which the taxpayer is personally and effectively present for more than six months (183 days) in a calendar year or for less than six months if he or she is present for a substantially greater part of the year in that country than in any other country.
- He or she carries on a professional activity in France, salaried or not, except if the role is of accessory importance (ie, he or she must dedicate the majority of his or her working time to the activity carried out in France) even if this activity does not represent the main part of his or her income.
- He or she has the centre of his or her economic interests in France. This is proven through corroborating evidence (eg, the location of main investments, where private affairs are managed, the place which serves as the centre of an individual’s professional life or the place from where the individual derives most income).
Describe the income tax regime in your jurisdiction (including tax base, rates, filing formalities and any exemptions, reliefs or deductions).
Individual income tax is assessed annually on a household’s taxable income and declared the following year. Taxable income consists of annual available income from all sources. Income is identified based on its nature and then allowances and deductions are applied in calculating net taxable income subject to progressive tax rates.
Wage, salaries, pensions and annuities
Gross earned income includes all amounts and benefits in kind available to the taxpayer. Professional expenses are taken into consideration on a notional basis (10% deduction) or on the actual amount if so chosen by the taxpayer.
Business profits consist of profits from industrial, commercial and craft activities, from certain activities taxed in that category by law.
Non-commercial profits consist of profits from the profession, office and practice of an individual who does not have trader status and the profits from all occupations, non-profit concerns and sources of profit not falling within any other category of profits or income.
For business profits and non-commercial profits, taxpayers may be taxed either on an actual assessment basis or according to a simplified regime applicable below a certain threshold of revenue (ie, on a notional profit equal to a percentage of turnover). The simplified regime also reduces taxpayers’ accounting obligations.
Agricultural profits include all income that farmers, tenant farmers or working owners derive from the operation of rural property. Depending on the level of farming income, the micro-agricultural regime applies and the taxable income is equal to the average income for the current year and the two previous years, from which a fixed-rate allowance of 87% for expenses is deducted.
Income from real property
Income from real property (ie, rental income) is determined under either the simplified micro-land regime or the actual regime. Under the micro-land regime, the taxable income from property is determined after deducting a notional 30% allowance.
Investment income (ie, interest, distributions, dividends and similar revenues) are taxed under the flat rate withholding tax system at a rate of 30%, corresponding to 12.8% income tax and 17.2% in social taxes. However, taxpayers with lower income can elect for taxation of all of their investment income and capital gains of a considered year at the progressive income tax rates (an allowance of 40% on dividend income applies). This option is applicable to all the income subject to the withholding tax system without the possibility of making a partial option.
The domestic rate of withholding tax applicable to dividends paid to non-French tax resident taxpayers is also 12.8%.
Non-French residents must file an annual return reporting all their French source income. Certain French source income is subject to withholding tax, which may discharge the income tax liability partly or in full. A non-resident’s tax liability in France must be at least 20% of net taxable income.
French individual income tax is levied at progressive rates. France has a regime of joint taxation for married couples and civil partners.
The progressive tax scale is applied to the taxable income per share, which is based on a coefficient depending on the number of household members. The scale corresponding to one share is as follows:
- under €9,807, 0%;
- over €9,807 and less than or equal to €27,086, 14%;
- over €27,086 and less than or equal to €72,617, 30%;
- over €72,617 and less than or equal to €153,783, 41%; and
- over €153,783, 45%.
An exceptional 3% and 4% tax on high income tax payers may apply and is based on reference taxable income and is equal to:
- 3% for the portion of income between €250,001 and €500,000 for single taxpayers or between €500,000 and €1 million for couples subject to joint taxation; or
- 4% for the portion of income over €500,000 for single taxpayers or over €1 million for couples subject to joint taxation.
Social security charges apply to all French tax residents. This is charged at a rate of 10.4% on 98.25% of gross salary if it does not exceed €159,928 per year (2018 limit) and 100% of the remaining salary, including benefits in kind and bonuses.
Social security charges on passive income and capital gains is increased by a social tax surcharge, resulting in a total rate of 17.2%.
As a matter of principle, 6.8% of the social security charged is deductible for French income tax purposes.
Losses from one category of income may, in principle, offset profit from other categories and may be carried forward. However, this principle is subject to several limitations (eg, certain losses may be offset only against income from the same category of income in the same year or in the following 10 years).
French tax residents must file annual income tax returns (using Form 2042) generally by the end of May following the end of the relevant tax year, declaring their net income and charges for the previous year.
Describe the capital gains tax regime in your jurisdiction (including tax base, rates, filing formalities and any exemptions, reliefs or deductions).
The 30% flat withholding tax applies to capital gains from the sale of shares and other income and assimilated gains.
The allowances for the holding period that existed before 2018 are eliminated as of 2018, except those that apply to the sale of shares that were acquired before January 1 2018 on specific election. Similarly, under certain conditions, a rebate set at €500,000 applies to capital gains realised by senior executives of small and medium-sized enterprises at retirement.
Capital gains realised by individuals following the sale of real property, real property rights and the disposal of securities of real estate-oriented companies are subject to income tax at a rate of 19%, plus social taxes at a rate of 17.2%.
Some capital gains are exempt from tax, including gains realised from:
- the sale of the seller’s principal home;
- the sale of property for less than €15,000; or
- the first sale of a housing unit other than the seller’s principal residence under certain conditions.
The taxable basis is equal to the difference between the sales price and the purchase price paid by the seller, in addition to certain specified expenses and charges where relevant.
The calculated gross capital gain is reduced by an allowance based on the duration of ownership leading to total income tax exemption at the end of the 22nd year and total social tax exemption after 30 years.
Capital gains on property representing a taxable amount of more than €50,000 are subject to a surtax, the rate of which is between 2% and 6% based on a progressive scale depending on the amount of the taxable capital gain.
Capital gains on property realised by non-resident individuals are taxed at the same rate. Non-residents can enjoy an exemption of €150,000 of net taxable capital gains limited to one residence per taxpayer under strict conditions.
Inheritance and lifetime gifts
Describe the inheritance and gift tax regime in your jurisdiction (including tax base, rates, filing formalities and any exemptions, reliefs or deductions).
In terms of territory, the following are subject to inheritance or gift tax in France:
- movable or real estate assets worldwide, when the deceased or the donor was a French tax resident;
- movable and real estate assets worldwide, inherited or gifted from a non-French tax resident, by an heir or donee who is a French tax resident and has been a French tax resident for more than six of the last 10 years preceding the death or the gift; and
- movable and real estate assets located in France only, when the deceased or donor is a non-French tax resident and the heir or donee is a French tax resident or has not been a French tax resident for more than six of the last 10 years preceding the death or the gift.
The net share received by each heir is decreased by a tax allowance, the amount of which depends on the relationship of the beneficiary with the deceased and is subject to a rate based on a scale depending on the same conditions.
Before applying the allowance, any previous gifts made by the deceased to the same beneficiary should be added to the net share of the beneficiary if the gifts were granted less than 15 years before the death (back-tax rule).
The main allowances for both gifts and inheritances are:
- €100,000 for direct line inheritances and gifts between siblings;
- €15,932 for inheritances between siblings; and
- €159,325 for inheritances and gifts to disabled people.
In addition to those listed above, the main allowances applicable to gifts only are:
- €80,724 for gifts between spouses;
- €31,865 per share for all gifts to grandchildren; and
- €5,310 per share for all gifts to great-grandchildren.
Once allowances have been applied, the excess is taxed at rates ranging from 5% to 45% depending on the value of the inheritance.
An inheritance tax declaration (Form 2705) must be filed within six months or one year following the death, although this depends on whether the death occurred in France. Inheritance tax must be paid at the time of filing the declaration.
A gift inter vivos is, in principle, a notarised act that the notary must file with his or her tax centre within one month from the day of the signature of the act. The tax is paid to the notary who transfers it to his or her tax centre.
What taxes apply to individuals’ acquisition and disposal of real estate in your jurisdiction?
The transfer of real estate and real estate rights in return for payment is subject to a real estate registration tax at a rate of 5.8%. The transfer of ownership of real estate rights is also subject to a registration duty at a rate of 0.7%.
Property tax is due by any owner of real estate or land located in France on January 1 of the year of taxation.
Dwelling tax must be paid by any occupier of a residence in France. This tax is levied on the person who occupies the residence on January 1 of a given year.
As of January 1 2018 the French real estate wealth tax is reoriented to cover only real estate assets.
The tax is due when the value of the taxable net assets is equal to or greater than €1.3 million. French tax residents (individuals only) are liable to pay real estate wealth tax on the net value of their household’s worldwide real estate assets, whereas non-French tax residents are liable on the net value of their household’s assets in France only.
The tax applies to all real estate property assets that are not used for professional purposes. In the case of indirect ownership, only the value of the interposed structure representing the value of the real estate property is subject to tax. However, no tax is due if the taxpayer holds less than 10% in an operating company.
A 30% allowance is applicable against the value of the taxpayer’s principal home.
The taxable basis is the net fair market value of the real estate (eg, taxes relating to taxable real estate assets and loans taken for the acquisition of the real estate) can be deducted from the taxable basis for the real estate wealth tax.
The wealth tax payable is determined by applying a sliding scale with a variable rate from 0.5% to 1.5% of the individual’s taxable assets over €800,000.
The real estate wealth tax has a capping mechanism which applies to French tax residents only, whereby the real estate wealth tax, plus income tax and social tax of a given year cannot exceed 75% of the global income of the previous year.
Any entity (eg, company, trust or similar institution) which directly or indirectly owns real estate assets located in France is subject to an annual 3% tax assessed on the fair market value of the asset. Exemptions are available if the ultimate beneficial owner(s) are disclosed to the French tax administration.
Non-real estate assets
Do any taxes apply to the acquisition and disposal of other assets apart from real estate?
Registration duties apply to shares and stocks. The registration duties rate may be fixed, proportional or progressive depending on the type of deed or legal transaction.
Other applicable tax regimes
Are any other direct or indirect tax regimes relevant to individuals?
An exit tax on unrealised capital gains may apply to taxpayers who cease to be French tax residents, if:
- they own more than 50% of the stocks of a company or more than €800,000 in shares the day before they leave France; or
- they have been French tax residents for at least six of the last 10 years.
Payment of the exit tax may be deferred until disposal of the shares which are subject to the tax, either automatically or subject to providing financial guarantee to the treasury. The deferral of payment ends after 15 years of tax residence outside of France, provided that the shares subject to the exit tax are still owned by the taxpayer. Certain other events may affect the deferral of payment of the exit tax.
Are there any special tax planning considerations for individuals with a link to your jurisdiction?
Subject to certain anti-abusive provisions, income-producing assets can efficiently be held within capitalisation devices (eg, corporations, life insurance or capitalisation products). The income accumulated in such structures is not taxed at the individual taxpayer’s level until the funds are withdrawn from the structure.
This allows for the deferral of income taxation, as well as improving strategies of the capping mechanism under the wealth tax.
Life insurance policies also offer the advantages of:
- being outside the scope of succession; and
- providing a capitalisation tool allowing for the deferral of taxation and a potential capping strategy for wealth tax purposes.
Following the withdrawal of the proceeds by the policyholder, only the income portion of the withdrawal is subject to income and social tax. The capital portion of the withdrawal is refunded tax-free. The rate of tax on withdrawals varies depending on the effective duration of the contract or the date of redemption. Social taxes also apply.
Finally, the impatriate regime (which is applicable to employees sent to France to perform professional duties for a limited period of time) provides an exemption from income tax to the end of the fifth year following arrival (or the eighth year for assignments beginning after July 6 2016) for the portion of the salary package compensating for the transfer to France (impatriation premium) and the portion paid specifically for duties performed outside of France for the benefit of the French host company.
The application of the regime must not lead to an exemption of more than 50% of the impatriate’s total compensation. However, the employee may choose to have the total impatriation premium fully exempt from tax, but with a limit on the salary paid for duties performed abroad of 20% of the net taxable salary.
Passive investment income and capital gains from the sale of securities received from a country with which France has entered into a double tax agreement, including a mutual assistance clause, are liable to income tax on only half of the amount. However, social taxes are still due on 100% of the amount.
Impatriates are also exempt from French wealth tax on their real estate assets held outside France for the first five years under specific conditions.
Trusts, foundations and charities
Are trusts legally recognised in your jurisdiction? If so, what types are available and most commonly used?
Trusts as institutions do not exist under French law. However, French case law recognises the validity of trusts set up abroad and the effects that those trusts may have in France provided that they respect the laws in effect in the country in which they were created and they do not infringe the mandatory rules of French law (eg, forced heirship).
What rules and procedures govern the establishment and maintenance of trusts?
Article 1649 AB of the French Tax Code defines French reporting obligations of trustees of trusts having ties with France. The trustee must file a French tax form if the settlor, the trustee or at least one of the beneficiaries is a French tax resident or if the trust holds an asset or a right located in France.
The following French tax forms must be completed:
- an annual return which discloses the valuation of assets, rights and proceeds held by the trust, as well as general information on the trust on January 1 of each year; and
- an event-driven return which concerns the occurrence of any event relating to the settlement, modification or termination of a trust and must be filed within one month after the event occurred.
Failing to comply with these requirements would result in a penalty of €20,000 per return.
How are trusts taxed in your jurisdiction?
Up until the adoption of the law on July 29 2011, France had no tax legislation dealing with the tax treatment of trusts in respect of gift and inheritance taxes as well as wealth tax.
Proceeds of trusts, regardless of the consistency of the assets contained in the trust, are subject to French personal income tax, on distribution only.
The usual French personal income tax rates are applicable, on top of which additional social taxes apply.
Assets held by a trust are considered to be owned by the settlor or deemed settlor for wealth tax purposes and are therefore taxable as part of the individual’s taxable assets (charitable trusts and pension trusts may be exempt under certain conditions).
The settlor (or the beneficiary deemed settlor) is subject to the net wealth tax on:
- all the real estate assets held by the trust regardless of the location of such assets if French resident; or
- on real estate assets located in France only if non-French resident.
A 1.5% standalone tax is due in the event of non-disclosure of assets placed in a trust for French wealth tax purposes. The 1.5% tax would not be due if the assets have been duly included in the settlor’s wealth tax basis or if the settlor’s assets remain below the wealth tax threshold if such assets have been officially disclosed by the trustee.
Finally, French gift or inheritance taxes are applicable on the gratuitous transfer of trust assets to the beneficiaries during the life of the settlor or after his or her death. Different rates apply depending on whether the assets are attributed to an identified beneficiary.
Foundations and charities
Are foundations and charities legally recognised in your jurisdiction? If so, what forms can they take?
A foundation is an act by which one or several individuals or legal entities agree to irrevocably allocate some assets, rights or resources for the purpose of carrying out non-profit and public interest works. Irrevocable allocation guarantees the continued operation of the foundation, since these assets or resources cannot be withdrawn.
Foundations can be set up for cultural, scientific or charitable purposes only and, thus, cannot be considered as a substitute for trusts (except to a limited extent in the case of charitable trusts).
What rules and procedures govern the establishment and maintenance of foundations and charities?
Foundations cannot be freely used as charities in the private sector and should be controlled by a representative of the Administrative Supreme Court. They acquire legal personality and the right to receive gifts or legacies on special authorisation only, which can be granted under very strict conditions and provided that the only purpose of the foundation is to promote public welfare.
How are foundations and charities taxed?
Public utility foundations benefit from a corporate tax exemption in respect of their income deriving from non-profit activities.
Individuals making donations to public utility foundations under the aegis of a public utility foundation can deduct 60% of the contribution from their French income tax, up to 20% of the donor’s taxable income.
Anti-avoidance and anti-abuse provisions
What anti-avoidance and anti-abuse tax provisions apply in the context of private client wealth management?
Investments in financial structures established in a country with favourable tax regime
Individuals who directly or indirectly hold at least 10% of shares, financial rights or voting rights in a legal entity established outside of France which is subject to a favourable tax regime is taxed in France on the accrued amount by the foreign entity irrespective of actual distribution.
The income realised is taxed in the hands of its French resident shareholder based on 125% of the amount of income calculated. If the entity is located in a non-cooperative state, the 10% participation requirement is deemed to be met.
Remuneration for services paid abroad
Article 155A of the French Tax Code provides that the individual shareholder of a rental company or of a company receiving income for services rendered by a person resident or established in France is taxed as if the income was received by him or her directly if:
- the individual controls the foreign entity;
- the entity has no other preponderant commercial or industrial activity; or
- the entity is subject to a favourable tax treatment.
French reporting obligation regarding foreign investments
French residents who own a foreign account or a foreign life insurance policy must report their existence to the French tax authorities. Failing to comply with these requirements is sanctioned by fines for non-disclosure, an 80% penalty and taxes due in addition to late payment interest.
Anti-money laundering provisions
What anti-money laundering provisions apply in the context of private client wealth management (eg, beneficial ownership registers)?
Anti-money laundering regime
All transactions suspected of involving money laundering or terrorist financing are reported to the Intelligence Processing and Actions Against Clandestine Financial Circuits cell of the Ministry of Finance and Budget.
Beneficial ownership register
French legislature introduced a new duty to declare the ultimate beneficial owner(s) of all non-listed corporate entities registered in France. This led to the creation of beneficial ownership registers at seats of the commercial courts where corporate entities have a presence in France.
Wills and probate
What rules and restrictions (if any) govern the disposition of and succession to an individual’s property and assets in your jurisdiction?
A person cannot give away a certain portion of his or her property by either inter vivos or testamentary transfer. A specified minimum proportion of his or her assets must pass to his or her relatives as follows:
- If the deceased is survived by one child, the portion reserved must equal half of the estate.
- If the deceased is survived by two children, the portion reserved must be equal to two-thirds of the estate.
- If the deceased is survived by three or more children, the portion reserved must be equal to three-quarters of the estate.
- If the deceased is survived by a spouse, the portion reserved is equal to one-quarter of the estate and is provided only if there is no descendant and no divorce has been announced.
What rules and procedures govern intestacy?
As of August 17 2015, succession to an intestate’s movable and immovable property is governed by the law of the state in which the deceased has his or her habitual residence at the time of death.
When the deceased has organised no succession, the heirs and their rights can be determined only by law. In the event that the deceased was not married, his or her estate would go to any surviving:
- parents; or
- heirs of the maternal and paternal family.
In the presence of a widow, the estate would be divided between the surviving spouse and children or between the spouse and the parents of the deceased if they are still alive.
What rules and restrictions (if any) apply to the governing law of a will?
For deaths occurring after August 16 2015, new conflict-of-law rules apply for EU countries (excluding Denmark) and concern all residents of the European Union, regardless of nationality.
The applicable succession law will be the law of the last habitual residence of the deceased and will classify real estate as movable assets. However, the deceased may choose, by will, to designate his or her national law as the applicable law.
What are the formal and procedural requirements to make a will? Are wills and other estate documents publicly available?
A will can be authentic, mystic or holographic depending on who writes the will and if it has been signed in the presence of witnesses and a notary.
The testator should give the original will to a French notary in order for it to be kept and registered at the Last Will and Testament's Registrar. This formality is not a condition of validity of the will, but guarantees that the will can be found and used later by any notary who may be instructed to deal with the estate.
Validity and amendment
How can the validity of a will be challenged? Can the will be amended after the decedent’s death?
A will can be changed or revoked by the testator at any time and the notary need not advise the beneficiaries of any alterations or revocation.
Heirs can challenge a will if, for example, the forced heirship rights have not been respected. However, only reserved heirs can bring a court action within five years of the opening succession to challenge gifts made by the deceased during his or her life that infringe heirship rules.
How is the validity of a will established in your jurisdiction?
In order to qualify to make a will, a person must:
- be at least 18 years of age;
- have legal ownership over the possessions bequeathed; and
- be judged to be sound of mind.
To what extent are foreign wills recognised? Do any special rules and procedures apply to establishing their validity in your jurisdiction?
French law recognises a will that has been prepared in another country provided that it is valid in that country. Individuals who have a will drawn up by solicitors from a foreign country should ensure that it complies with French law and that the two wills do not overlap or revoke each other.
What rules and procedures govern:
(a) The appointment of estate administrators?
The ownership of French assets vests directly in the beneficiaries so there is no exact equivalent to an executor or administrator in France. Therefore, it is up to the beneficiaries to deal with the administration of an estate. It is common for a French notary to be appointed to deal with the administration of an estate on behalf of the beneficiaries.
The testator may appoint one or more representatives whose duty is to administer the totality or part of the estate for the benefit of one or several heirs.
The heirs may agree to convey the settlement of the succession either to one of them or to a third person under the condition that all heirs have accepted the succession purely and simply.
A judicial mandate can be concluded if one of the heirs has accepted the succession only to the extent of the net assets.
The testator may appoint one or more executors whose mission is solely to ensure the execution of the testator’s last will.
(b) Consolidation and administration of the estate?
Succession begins after the deceased’s death and the heir is thus vested with the inheritance from this time. No common law estate administration is required in France and there is no grant of probate.
The notary first interrogates the Central File of Last Will and Testaments to check whether there is a will or gift between spouses. An inventory is prepared by the notary alone or with the help of an auctioneer.
(c) Distribution of the estate to heirs?
The notary usually drafts an inheritance deed. This document sets out:
- the terms of the will;
- the identity of the deceased’s heirs;
- details of all the beneficiaries; and
- how the estate will be divided between them.
Distribution of an estate to the heirs depends on whether the deceased died intestate or left a will.
When the legal heirs are vested, they are in indivision which is a form of ownership which resembles tenancy in common.
(d) Settlement of the decedent’s debts and payment of any taxes and fees?
The heir must make a choice within four months after the opening of the succession.
If the succession is accepted purely and simply, the heir is liable for the deceased’s debts, which may be enforced against the heir’s own assets.
If the heir accepts the succession and the amount of the net assets, he or she must file a declaration with the court of first instance of the district where the succession is opened. He or she thus limits his or her liability for debts to the extent of the net assets.
Are there any special considerations specific to your jurisdiction that individuals should bear in mind during succession planning?
Granting a gift to a spouse, a child or any other person is a common estate planning technique.
Life insurance falls outside the scope of French succession laws. Consequently, the use of life insurance could mitigate the application of the strict French forced heirship rules, under certain limits.
Death benefits paid by an insurance company may be partially taxable in application of specific tax rules. Only policies taken out before November 21 1991 and those with premiums paid before October 13 1998 give entitlement to full exemption for death benefits.
Split of ownership strategy
The temporary split of ownership offers, on the one hand, the right to use and benefit from the income of an asset (usufruct) and, on the other hand, the right to dispose of such an asset (bare-ownership). This division makes it possible to reduce the effect of taxation on the transfer of assets as the taxable value of the bare-ownership is discounted depending on the age of the usufruct owner. Following the death of the usufructuary, the usufruct ends and the bare ownership of the property is reconstituted in the hands of the children, tax free.
The transfer of businesses or shares in companies is eligible for a partial tax exemption when the asset is transferred in the form of a gift or as an inheritance. The exemption applies to 75% of the value of the shares or the business.
The shares must be the subject of a joint and individual undertaking by shareholders.
Capacity and power of attorney
Loss of capacity
What rules, restrictions and procedures govern the management of an individual’s affairs where he or she loses capacity and the grant of power of attorney in such cases?
When an individual loses capacity, a judge may order that a protective measure be put in place. The four options available with varying degrees of restrictiveness are:
- judicial protection;
- guardianship; and
- family empowerment.
What rules, restrictions and procedures govern the holding and management of a minor’s assets until the minor reaches the age of capacity?
The age of capacity is fixed at 18 years in France. Both parents are associated jointly in the management of a minor’s property. If neither father nor mother remains in a position of authority (eg, following death or withdrawal of authority), then a guardianship must be created.
Parents are provided with the legal administration of their children which consists of representing them in civil acts. As a general rule, a legal administrator can perform acts of administration but, for acts of disposal, the parents must perform together. However, for a limited number of acts of disposal, the parents must first obtain permission from the guardianship authority.
Parents also enjoy the right of legal enjoyment (ie, a legal usufruct permitting them to receive and use the income of minor children who are not emancipated).
The statutory administrator of a non-emancipated minor may accept a gift that imposes no obligation and fulfill reporting obligations and pay gift tax.
In France, minors have no capacity to manage their assets. As a result, when a minor becomes an heir in a succession, he or she cannot accept or renounce the succession. Therefore, a board of guardians and family members may need to be convened or consultation or authorisation sought from the guardianship judge.
Marriage and civil partnerships
What matrimonial property regimes are recognised in your jurisdiction?
The marriage contract allows to prepare the matrimonial property regime which governs the ownership of property between spouses and determines how property is divided and inherited at the end of the marriage. The contract marriage must be drafted by a notary.
There are a variety of matrimonial property regimes. It is also possible to tailor-make regimes by choosing specific items of property.
Under the separation of property regime nothing is jointly owned between spouses. However, it is possible to integrate a more or less extensive community in the separation of assets.
Under the universal community of property regime, all assets owned by the spouses on the day of marriage and subsequently acquired assets (including gifts and inheritance) are jointly owned. Spouses are therefore jointly and severally liable for all claims.
Community of acquired assets is the default matrimonial property regime in France when spouses do not enter into a marriage contract. The spouses have joint ownership of all assets and liability for all debts limited to assets and liabilities accrued after the marriage took place. Each spouse retains his or her own property acquired before the marriage and gifts and inheritances received during it.
Are same-sex marriages and/or civil partnerships recognised in your jurisdiction?
Same-sex couples were granted the right to marry on May 18 2013. Since this date, they benefit from all benefits and duties of matrimonial property rights.
The civil partnership was created to allow two persons without regard to their gender to benefit from personal and civil rights. A civil partnership or a civil solidarity pact may be established by a private or notarial instrument.
From a civil perspective, a civil solidarity pact creates neither a marital regime nor inheritance rights between the partners. From a tax perspective, deductions and the tax scale are the same for married spouses as for the partners of a French registered civil partnership. Therefore, a partner of a civil solidarity pact is exempt from any inheritance tax.
Is there a legal distinction between legitimate and illegitimate children in terms of estate and succession planning?
Natural children who have been legally recognised have the same rights as legitimate children under French domestic law and are therefore entitled to receive the same portion of inheritance as their siblings.
Is there a legal distinction between natural and adopted children in terms of estate and succession planning?
Under French civil law, the following distinctions apply between full and simple adoption:
- Full adoption establishes a new parent-child relationship which replaces the adoptee’s previous parental relationship.
- Simple adoption does not sever the parent-child relationship between the adoptee and his or her birth family and, as a result, two relationships coexist.
In case of full adoption, the adopted child has the same rights as a natural child in his or her adoptive family. In case of simple adoption, the adopted child retains his or her rights regarding his or her family of origin and has the same rights as a natural child in his or her adoptive family, but is not considered to be an heir when it comes to the adopter’s ascendants.