French inheritance tax (droits de succession) is among the highest in Europe, with rates that can reach up to 60% for distant relatives or unmarried partners. Each year, more than 300,000 estates are declared in France, and according to INSEE, inheritance tax brings in over €15 billion annually to the French state. For foreign residents or second-home owners, this system can come as a surprise and drastically reduce what loved ones actually receive.
The good news is that there are perfectly legal strategies to reduce or even avoid inheritance tax in France. With careful planning, you can protect your family’s assets and ensure a smooth transfer of wealth.
Here are five effective ways to minimise French inheritance tax:
- Make lifetime gifts (donations) using available tax allowances.
- Use a Société Civile Immobilière (SCI) to manage and transfer property more efficiently.
- Take out a life insurance policy (assurance-vie) to keep assets outside the taxable estate.
- Adopt a French marriage contract or PACS to protect your partner from high tax rates.
- Apply the EU Succession Regulation to choose your national inheritance law.
At French Tax Online, our English-speaking experts specialise in estate and inheritance planning for expats in France. We help you reduce tax exposure, structure your assets wisely, and secure your family’s financial future.
5 Legal ways to reduce or avoid French Inheritance Tax
1. Make Lifetime Gifts (Donations) Using Available Allowances
One of the simplest and most effective ways to reduce inheritance tax is to transfer assets during your lifetime.
In France, you can make tax-free gifts up to:
- €100,000 per child every 15 years,
- €31,865 to grandchildren, and
- €15,932 to siblings, under the same 15-year rule.
These thresholds renew after each 15-year period, meaning long-term planning allows you to pass on significant wealth gradually without triggering inheritance tax.
Additionally, cash gifts up to €31,865 (known as donations de sommes d’argent) can be made under specific conditions if the recipient is over 18 and the donor is under 80.
2. Use a Société Civile Immobilière (SCI) to Hold and Transfer Property Efficiently
Creating an SCI (Société Civile Immobilière) can be a powerful estate planning tool. Instead of owning property directly, you and your family hold company interests, which can be transferred more flexibly over time.
With an SCI, you can:
- Gift portions of your participation (company interests) gradually, using tax-free allowances.
- Avoid forced joint ownership (indivision) and disputes between heirs.
- Apply a valuation discount (typically around 10%) when calculating inheritance tax, as company interests are less liquid than direct property.
For families with property in France, particularly foreign residents, an SCI offers control, flexibility, and reduced tax exposure when transferring assets.
3. Take Out a Life Insurance Policy (Assurance-Vie)
A life insurance policy, or assurance-vie, is one of the most tax-efficient ways to transfer wealth in France. The funds paid to beneficiaries are not part of the taxable estate (up to certain limits).
Key advantages include:
- Premiums paid before age 70 benefit from a €152,500 exemption per beneficiary.
- Premiums paid after age 70 are only taxable on the portion exceeding €30,500, regardless of the policy’s total value.
Life insurance offers flexibility, confidentiality, and tax efficiency, making it an essential component of French inheritance planning.
4. Adopt a French Marriage Contract or PACS to Protect Your Partner
In France, spouses and civil partners (PACS) are fully exempt from inheritance tax. However, unmarried partnersare not, they are treated as unrelated individuals and taxed at 60%.
Couples living together can therefore avoid a heavy tax bill by:
- Marrying under a French marriage regime adapted to their situation (such as communauté universelle).
- Entering into a PACS (civil partnership), which grants full inheritance tax exemption to the surviving partner.
These arrangements not only protect your partner but also provide clear legal recognition under French law.
5. Apply the EU Succession Regulation (Brussels IV)
Since 2015, the EU Succession Regulation (Regulation No. 650/2012) allows foreign nationals living in France to elect their national law to govern their inheritance.
This can be particularly useful for non-French residents or retirees in France, who may wish to:
- Apply their home country’s inheritance rules instead of French forced-heirship laws.
- Choose a distribution plan that better matches their family structure and wishes.
While this rule affects inheritance law, not inheritance tax, it provides greater control over who receives your assets, especially when combined with other tax-efficient tools like SCIs and life insurance.
Quick video insight
What Is French Inheritance Tax?
French inheritance tax, known as droits de succession, is a tax applied when assets are transferred after someone’s death. Unlike in many countries where tax is charged on the estate as a whole, France taxes each beneficiary individually, based on what they receive and their relationship to the deceased.
Every person who inherits something in France is entitled to a personal tax-free allowance, after which progressive tax rates apply. The closer the relationship, the larger the allowance and the lower the rate. For example:
- Spouses and civil partners (PACS) pay no inheritance tax at all.
- Children and parents benefit from a €100,000 allowance each, with rates ranging from 5% to 45%.
- Siblings receive a €15,932 allowance, then pay 35% to 45%.
- Other relatives and unrelated beneficiaries pay up to 60% after only a small allowance of €1,594.
Inheritance tax applies to all assets located in France, including property, bank accounts, investments, and valuables. If the deceased was tax resident in France, their worldwide assets are also taxable, although double taxation treaties(such as the one between France and the UK) can help prevent the same assets from being taxed twice.
How Much Can You Inherit Tax-Free in France?
In France, each heir benefits from a personal tax exemption based on their relationship to the deceased. Only the portion of the inheritance above that exemption is subject to droits de succession. Key thresholds include:
- Children and parents: €100,000 each
- Siblings: €15,932
- Nephews / nieces: €7,967
- Others / unrelated persons: €1,594
Any amount inherited above these allowances is taxed at progressive rates depending on the value and relationship, from 5% up to 60%.
FAQ – French Inheritance Tax & Estate Planning
Do non-residents have to pay French inheritance tax?
Yes. If a non-resident owns property or assets located in France, their heirs must pay droits de succession on those French assets. However, if the deceased was not a French tax resident, assets located outside France are not taxed in France. A double taxation treaty (for example, between France and the UK) can prevent the same inheritance from being taxed twice.
What assets are included in French inheritance tax?
French inheritance tax applies to all assets located in France, including real estate, cash, bank accounts, investments, and valuable items such as artwork or jewellery. For French tax residents, worldwide assets are included in the taxable estate.
How long do you have to pay inheritance tax in France?
Inheritance tax must generally be paid within six months of the person’s death if they passed away in France, or within one year if the death occurred abroad. Late payments may trigger interest charges. Extensions or payment plans can be granted in special cases if the inheritance includes non-cash assets like property.
Can stepchildren or unmarried partners inherit without paying 60% tax?
Without special arrangements, stepchildren and unmarried partners are treated as unrelated individuals and face the highest 60% tax rate. To avoid this, couples can:
- Enter a PACS (civil partnership) or marriage contract, which grants full exemption to the surviving partner.
- Use an SCI or life insurance policy (assurance-vie) to pass assets outside the taxable estate.
Are there inheritance tax exemptions for the main residence?
Yes. If the deceased’s main home continues to be occupied by the surviving spouse, PACS partner, or children, its taxable value can be reduced by 20%. This relief only applies when the property remains the primary residence of the beneficiaries.
Can you combine French inheritance tax allowances?
Yes, tax-free allowances renew every 15 years. You can make several gifts (donations) over time to the same person and benefit from the full exemption each period. This makes long-term planning essential to optimise your estate and reduce future tax.
Does France recognise trusts for inheritance purposes?
Trusts are not fully recognised under French civil law, and assets placed in a trust may still be subject to French inheritance tax. For residents of France or owners of French property, using structures like an SCI or assurance-vie is usually a more compliant and efficient alternative.
How does the EU Succession Regulation help foreign nationals?
The EU Succession Regulation (Brussels IV) allows foreign residents in France to elect their national inheritance law instead of French law. This can help avoid forced heirship rules, allowing you to distribute assets more freely. However, this rule affects inheritance law, not taxation, French inheritance tax (droits de succession) still applies to assets in France.
Is life insurance really outside the taxable estate?
Yes, within limits. For premiums paid before age 70, up to €152,500 per beneficiary is exempt. For premiums paid after 70, only the portion exceeding €30,500 is taxable. This makes assurance-vie one of the most efficient tools for reducing French inheritance tax.
How can I plan effectively to reduce tax for my heirs?
Combine several legal strategies:
- Make regular lifetime gifts within tax-free allowances.
- Hold property through an SCI for flexibility.
- Open a life insurance policy to transfer money efficiently.
- Consider marriage or PACS for full partner exemption.
- Apply the EU Succession Regulation to control who inherits your assets.
For a personalised inheritance strategy, contact French Tax Online. Our English-speaking experts will help you design a tax-efficient estate plan that protects your assets, respects French law, and ensures your family keeps more of what truly matters.