TRUSTEE'S DISCLOSURE OBLIGATIONS

The trustees of certain defined trusts have to provide specific information to the FTA on an annual basis and upon the occurrence of certain events.

The annual declaration, to be filed, generally, not later than June 15 of each year (in certain cases, August 31), must provide the market value, as of the preceding January 1, of rights, assets, and capitalized income that are included in the trust arrangement. The declaration is due if any of the following conditions is met in respect of a given trust arrangement:

  • the settlor (or the deemed settlor as defined by the French tax rules) is tax domiciled in France; or
  • at least one beneficiary is tax domiciled in France; or
  • at least one of the rights, assets, and capitalized income comprised in the trust arrangement is located (or deemed to be located) in France; or
  • the trustee is tax domiciled in France.

When at least one settlor (or deemed settlor), or one beneficiary, is tax domiciled in France, all of the rights, assets, and capitalized income included in the trust arrangement must be declared; in the other cases, the declaration must cover only those assets, rights, and capitalized income that are located (or deemed to be located) in France (except certain financial portfolio investments).

Besides the above annual declaration, the trustee must also provide to the FTA the provisions of the trust arrangement and must declare (within a month) its constitution, any modification thereof, and its expiry.

The absence of the above declarations would result in a specific penalty equal to the higher of €20 thousand and 12.5 percent of the rights, assets, and capitalized income included in the trust arrangement. The penalty is due by the trustee, it being said that the settlor(s) and beneficiaries are jointly liable for its payment.

The statute of limitations is 10 years.

No declaration is required when (i) the trustee is governed by the law of a jurisdiction that has signed an administrative assistance treaty (to combat fraud and tax evasion) with France, and (ii) the trust arrangement has been set up to manage a pension plan for a company or group of companies.

 TRUST TAX

In the absence of the above declaration (for those taxpayers who are not liable to wealth tax), or in the absence of the relevant wealth tax declarations (for those taxpayers who are liable to the wealth tax), certain of the trust's rights, assets, and capitalized income (valued as of the preceding January 1) are liable to a specific levy of 1.5 percent (i.e. the highest current wealth tax rate). The time limit to file the declaration and pay the tax is June 15.

The trust tax is not due when the trustee is subject to the legislation of a jurisdiction that has signed an administrative assistance treaty (to fight fraud and tax evasion) with France, and the relevant trust is set up either for a charitable activity or to manage the pension plan of a company or group of companies.

The taxable rights, assets, and capitalized income are only those that are located (or deemed to be located) in France for those settlors and beneficiaries who are not tax domiciled in France; for all settlors or beneficiaries tax domiciled in France, all of the rights, assets, and capitalized income under trust are liable to tax.

In case of nonpayment of the tax by the trustee, the relevant settlors and/or beneficiaries are jointly liable.