Inheritance tax in France can be complex, especially when cross-border rules come into play. US citizens inheriting French property or other assets face unique challenges because both French inheritance law and US estate tax rules may apply. To prevent double taxation, the United States and France have signed a specific Estate Tax Treaty, which operates separately from the standard income tax treaty. This treaty sets out how French inheritance tax and US estate tax interact, particularly for real estate and cross-border estates. Advance planning is essential, as French inheritance law imposes forced heirship rules and strict reporting obligations. Professional advice from experts familiar with both French and US tax systems is highly recommended to ensure compliance and optimize your estate planning.
Need help with French inheritance or cross-border tax issues?
Our team at French Tax Online specializes in assisting US citizens and other international clients with the complexities of French taxation. While only notaries are legally authorized to handle matters such as inheritance and estate planning, we work closely with a strong network of US–France notarial experts who can provide the appropriate guidance. Our role is to connect you with the right professionals and ensure you receive clear, reliable advice in English.
Quick video insight
What is the inheritance tax in France for US citizens?
When a US citizen is considered a tax resident in France at the time of death, French succession tax applies, as a matter of principal, to their worldwide assets – not only property located in France. This means that both local real estate and foreign financial assets may fall under French inheritance rules.
The amount of inheritance tax depends on the relationship between the heir and the deceased. Transfers between spouses are fully exempt, while children benefit from significant allowances before progressive tax rates apply. More distant relatives or non-family heirs, however, face much higher tax rates.
French inheritance law also includes forced heirship rules, which guarantee a minimum reserved share of the estate to children, regardless of what is written in a will. This can conflict with common US estate planning tools, such as trusts or pass-through entities, which are often not recognized under French law.
Special considerations apply to French real estate. Families frequently rely on mechanisms such as a usufruct arrangement (life interest) or a Société Civile Immobilière (SCI) property holding company to organize ownership and transfer property in a more tax-efficient way.
Do US citizens pay tax on foreign inheritance?
Yes – but the rules depend on residency and the location of the assets. If a US citizen dies while resident in France, French inheritance tax applies to all worldwide assets, as a matter of principal, including property and financial holdings outside France. By contrast, if the deceased was a US resident who only owned French property, then only those French assets are subject to French inheritance tax.
On top of this, the United States may also impose federal estate tax on the estate of a US citizen, regardless of where the assets are located. This overlap can create a risk of double taxation. To address this, the US–France Estate Tax Treaty provides mechanisms for tax credits, allowing heirs to offset part of the tax paid in one country against their liability in the other.
Further reading:
How to Avoid Capital Gains Tax in France for non residents
Capital Gains Tax Allowance in France: Rates, Exemptions, and Tax Tips
The US–France Estate Tax Treaty
The US–France Estate Tax Treaty plays a central role in determining how inheritance is taxed when assets are located in both countries. It clarifies which country has primary taxing rights depending on the type of asset. For example, immovable property such as French real estate is usually taxed in France, while movable property or certain business assets may fall under US taxation.
A consolidated English version of the treaty is available from the French State Department, while the US Treasury provides the original, unconsolidated texts. In addition, Technical Explanations – particularly the 2004 version – offer practical examples of how credits and exemptions apply in cross-border situations. These explanations are valuable tools for understanding how to reduce the risk of double taxation.
Common loopholes and planning strategies
While French inheritance tax can be heavy, several planning strategies exist to reduce or even avoid it. Life insurance policies are a common tool, as they benefit from specific exemptions under French law (even though their consequences for US income tax purposes must be considered carefully). Making gifts or donations during one’s lifetime is another way to lower the taxable estate, and in some cases adopting stepchildren can expand the available exemptions.
Transferring property before death, or choosing to pay gift tax in advance, can also help manage future liabilities. Certain types of investments, such as woodland, enjoy favorable tax treatment. For French real estate, many families choose to hold property through a Société Civile Immobilière (SCI), which can simplify succession planning and offer tax advantages.
These options must be carefully evaluated with professional advice to ensure compliance and efficiency.
Executing a will in France, covering your French estate, is also an important step that we recommend you undertake. It would help increase the protection of the surviving spouse and reduce (or, in certain cases, eliminate) the influence of the French forced heirship system.
How to bring foreign inheritance to the USA
US heirs receiving an inheritance from France or other foreign countries must comply with IRS reporting rules. In many cases, this involves filing Form 3520 to declare the inheritance, especially when assets are transferred through trusts or large sums are received from abroad.
There are generally no restrictions on transferring inherited funds into the United States, but banks may apply compliance checks under anti–money laundering regulations. Proper documentation of the inheritance is therefore important to avoid delays.
Advance planning is essential, as foreign inheritances can sometimes create unexpected exposure to US estate or gift tax. Working with professionals experienced in cross-border reporting ensures that the transfer is both compliant and tax-efficient.
Related reading
Understanding inheritance tax in France is just one part of the bigger picture. If you are a US citizen living in or investing in France, you may also face questions about income tax, social charges, and double taxation treaties between France and the United States.
To dive deeper into these topics, we recommend our dedicated guide: French Taxes for US Expats – What You Need to Know or in video:
Need help with French inheritance or cross-border tax issues?
Our team at French Tax Online specializes in guiding US citizens and other international clients through the complexities of French tax law. Whether you need to file a return, calculate inheritance tax, or plan your estate efficiently, we provide clear, reliable advice in English.