New legislation which came into force on 1 January 2012 has changed the way trusts and estates are treated in France for tax purposes. If you are the trustee or executor of an estate where there are French assets, a French Settlor or a French beneficiary, read on…


Traditionally, French law has not recognised ‘trusts’ however, new legislation which came into force on 1 January 2012 has recognised trusts for tax purposes. This legislation may now have an impact on any trust or estate with a connection to France.

Does it apply to me?

A ‘trust’ can be created during lifetime or as a result of a Will or intestacy. A trust is subject to the new French tax regime where:

  • the trust’s creator (the ‘settlor’), or any trustee or beneficiary is resident or domiciled in France; or
  • the trust contains assets situated in France

Remember the regime may apply if you own property jointly or if, for example, one of the potential beneficiaries of the trust is resident or domiciled in France.

Tax Position

Wealth Tax

French wealth tax is now applicable to trust assets. If the settlor is resident in France and has assets over €1.3 million wealth tax shall be applied to trust assets as though the settlor still owned them. Upon their death the tax will be charged to the beneficiaries. If neither the settlor, trustees or beneficiaries are French resident then wealth tax will just be charged to any assets situated in France rather than worldwide trust assets.

Inheritance Tax

French inheritance tax is also applicable to trust assets. Taxation will apply if the settlor is resident in France at the time of death, all or some of the assets of the trust are French situated or if trust assets are received by a French resident beneficiary. The tax will be charged on the value of assets transferred out of the trust. If the settlor is French resident the tax will apply to all trust assets, if not then the tax applies only to French situated assets.


At the heart of the legislation is the obligation to disclose and report information about the trust. The trustees now have a duty to file an annual report providing full details of the terms of the trust deed. If the trust contains French assets then only these assets need to be disclosed. However, if either the settlor or a beneficiary is resident or domiciled in France then all worldwide assets of the trust must be disclosed.The penalty for non-disclosure is €10,000 or 5% of the value of the worldwide trust assets, whichever is greater. Liability falls jointly on the settlor and all trustees and beneficiaries. Therefore some people may be surprised to learn of their new obligations and liabilities.


The new tax regime may potentially have an effect on many trusts and estates in the United Kingdom. Settlors, trustees and beneficiaries of any trust with a connection to France should take particular care to ensure that they do not fall foul of the new French tax liabilities and reporting obligations imposed on them.