The Rectifying Finance Law n°2011-900 dated July 29th, 2011 enacted a specific tax regime applicable to trusts, notably created a reporting obligation for trustees of trusts of which the settlor or at least one of the beneficiaries has a tax residence in France or includes an asset or a right located in France (Article 1649 AB of the French tax code "FTC"), except financial investments as provided in the administrative ruling n°2011/37 dated December, 23rd 2011. The modalities of application of these reporting obligations were to be provided in a decree which was finally published in the official publication of enacted laws and regulations in France (Journal Officiel) on September 15, 2012.
The decree provides that the relevant tax residence (of the settlor or beneficiaries) is that of January 1st of each year.
Modalities of application have been detailed for two distinct reporting obligations
- A "event-driven" reporting obligation for the creation, modification or termination of the trust (1st paragraph of Article 1649 AB of the French tax code)
The declaration (there is no form for this at this stage) must be filed within the month following the related event with the Non residents tax center. Modification of a trust means any change in its terms, way of functioning, settlor, beneficiary deemed settlor, beneficiary, trustee, death of one of them, any new transfer to a trust,or any removal of assets or rights out of the trust, any transmission or allocation of assets, rights or proceeds of the trust, and more broadly, any legal or factual modification likely to harm the economy of functioning of the concerned trust.
Regarding trusts set up or which setting up, end or modifications occurred between the date of entry into force of the law dated July 29th, 2011 and the date of publication of the decree, the declaration has to be filed at the latest on December 31, 2012.
- An "annual" reporting obligation which notably contains a valuation on January 1st of each year of assets, rights and proceeds held by the trust (2nd paragraph of Article 1649 AB of the French tax code)
The declaration (there is no form for this at this stage) must be filed by June 15th of each year with the Non residents tax center. The sui generis 0,5% withholding tax provided for by Article 990 J of the FTC is paid (as the case may be in the absence of proper wealth tax declaration) together with the filing of such declaration.
For 2012, the deadline is September 30th 2012.
The details of each declaration is defined
Click here to read a free translation of text of the decree which lists all of the details to be provided for each reporting obligation to be filed.