This calculation is an essential step in the context of a gratuitous transfer, whether it involves movable property, real estate or agricultural enterprises.
The aim is to determine the taxes that each heir, donee or legatee must pay, depending on the value of the transferred assets, the applicable tax allowances, the relevant tax rates, and any possible reductions.
This text sets out the principles and steps involved in calculating inheritance tax based on the applicable legal and tax provisions.
- General Principles for Calculating Inheritance Tax
Traditionally, inheritance tax is calculated on the net share received by each beneficiary. This calculation is based on three main steps:
- Application of tax allowances: Allowances may be general or specific and are applied to each taxpayer’s net taxable share.
• Calculation of tax according to a progressive rate: The applicable rate varies depending on the family relationship between the deceased and the beneficiary.
• Application of any reductions: Certain situations may give rise to tax reductions based on specific criteria.
Special rules relating to the location of assets
When an estate includes assets located in different territories—such as mainland France, the overseas departments, French Polynesia, Saint-Pierre and Miquelon, Wallis and Futuna, or the French Southern and Antarctic Lands—inheritance tax is calculated on the total value of the estate, taking into account the relevant allowances, charges, and deductions.
However, the tax due is only payable in proportion to the value of the assets located in the territories covered by the French Tax Code (Code général des impôts).
- Content of the Inheritance Tax Return
The inheritance tax return must include the information necessary for calculating the tax, including:
- Determination of the taxable shares allocated to each heir, donee or legatee.
• Calculation of the tax owed by each person, taking into account exemptions, allowances, rates and possible reductions.
Specific Allowances Depending on the Degree of Kinship
- Main allowances for direct and collateral relatives
- The parents and children of the deceased are entitled to an allowance of €100,000 on their inheritance share.
• The deceased’s siblings may benefit from an allowance of €15,932, unless the conditions of Article 796-0 ter of the French Tax Code are met.
- Nephews and nieces
- Nephews and nieces of the deceased are entitled to an allowance of €7,927 on their inheritance share.
- Special allowance for heirs with disabilities
- Heirs with disabilities are entitled to a special allowance of €159,325, regardless of their degree of kinship with the deceased.
- Allowance in the absence of any other allowance
- If no other allowance applies, an allowance of €1,594 is granted for each inheritance share. This applies to any heir or legatee, regardless of kinship—even in the absence of any family relationship.
Special Rules Related to Kinship
- Transfers between foster parents and children raised by the State or by the Nation may, under certain conditions, benefit from the tax rate applicable to direct descendants.
• In cases of simple adoption, kinship is not taken into account when calculating inheritance tax.
Conclusion
In matters of inheritance tax, the applicable allowances vary mainly depending on the degree of kinship between the deceased and the heirs. The most substantial allowances apply to parents, children, siblings, and nephews and nieces.
Heirs with disabilities benefit from a special allowance, while a standard allowance of €1,594 applies if no other allowance is available, regardless of kinship. These rules allow the tax burden to be adjusted according to family proximity and specific personal circumstances.
The calculation of inheritance tax is based on general principles, including the application of allowances, the calculation of tax according to progressive rates, and potential reductions. Special rules apply when estate assets are located in different territories.
Finally, the inheritance tax return must contain all the necessary information to determine the tax owed by each beneficiary. These rules help ensure a fair and legally compliant distribution in accordance with the tax laws in force.
Med venlig hilsen / Kind regards
Cabinet Nicolas BRAHIN
Advokatfirma i NICE, Lawyers in NIC
Camilla Nissen MICHELIS
Assistante – Traductrice
1, Rue Louis Gassin – 06300 NICE (FRANCE)
Tel : +33 493 830 876 / Fax : +33 493 181 437
