On a death it is compulsory in France for the heirs to the estate to make an inheritance tax declaration (déclaration de succession). The declaration must be made even though there may be no liability to inheritance tax. The only exception is where the gross assets in the estate are worth less than €50,000.
The timescale permitted to do so is only 6 months following death, or 12 months where the death occurred abroad.
Any taxes due must be paid at the same time (although limited deferral is generally possible), and tough financial penalties apply for a late declaration and/or payment of the tax.
The process is handled by a notaire, who is subject to stringent rules on how it must be handled. Thus, a notaire must identify and contact all the potential heirs; the will must be found and interpreted; there are often disagreements between heirs that need to be resolved; and many establishments who need to cooperate in the process (notably banks and insurance companies) are often slow to respond.
All of this is doubly difficult for foreign nationals in France, where cross-border communications are likely to be necessary, and where there is a need to consider tax liabilities in the context of international tax law.
Neither may there be sufficient liquid assets in the estate to pay the taxes, and the sale of real estate to realise the cash will inevitably take time.
It is not surprising, therefore, that only around 30% of inheritance declarations are submitted in the permitted deadline.
In this context a draft law has been deposited in the National Assembly, signed by 15 parliamentarians, proposing that the declaration period be unified, so that for all declarations, a period of 12 months is permitted.
It is difficult to say at this stage whether the bill will attract government support, but it was noticeable during the debate on the introduction of the bill that it was not opposed by a government minister.
The bill has been sent to the Finance Committee of the National Assembly for detailed consideration. A suivre.
Related Reading:
