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French Taxes on Trusts
The French government has at last started to clarify the taxation of trusts used by French residents - whether as settlors moving to France or as beneficiaries. The loi de finances rectificatives implemented on 30 July 2011 included various details concerning trusts. Trusts must now be declared in any of the following cases: Wealth tax or a fixed “annual levy” of 0.5% is henceforth due on all such trust assets. The fixed levy is avoided if: The usual wealth tax rules and exemptions are available for all trust assets correctly declared (including the 5-year exemption on non-French assets for newcomers to France - see Wealth tax exemption Certain charitable trusts and certain trusts for managing foreign personal pension funds (such as SIPPs) are excluded from French wealth tax. French gift and inheritance taxes arise on the death of the settlor if If at the date of death, the specific share of assets due to a beneficiary is clearly identifiable, then the usual allowances and reduced “family rates” are applied - based on the relationship between the settlor and the beneficiary. The trust assets are combined for tax purposes with any other assets that may be received by each beneficiary - so tax-free allowances may already have been used up before being applied to trust assets. If at the date of death, there is a share of assets “globally due to descendants of the settlor”, then the rate of 45% will be applied to those assets In all other cases (eg assets remaining in the trust without specifically being attributed to family), then the rate of 60% will apply. The rate of 60% will also apply to Please note that these rules are very recent . Further clarification is awaited in the form of decrees and fiscal instructions. Please contact us if you would like to be kept informed or if you would like to receive the full details of the French rules on trusts and applying to all French-resident settlors/beneficiaries or Trusts with assets in France.
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