French Succession Law and Foreign Owners
French immovable property is always subject to French succession law for French assets, regardless of the owner's nationality or country of residence. This is a matter of public order (ordre public) under French private international law. A UK will leaving French property to non-family members, or an American living trust holding French real estate, does not avoid French succession tax on the French assets — it may affect how the assets pass, but the French tax treatment is determined by French law.
For EU residents, the EU Succession Regulation 650/2012 (Brussels IV) allows a person to elect the succession law of their country of nationality to govern their entire estate — including French immovable property. However, it does not affect French succession tax: that remains governed by French domestic law regardless of which succession law governs the inheritance.
IFI: The French Wealth Tax on Real Property
The impôt sur la fortune immobilière (IFI) replaced the ISF in 2018. Unlike its predecessor, IFI applies only to real property assets — financial assets are excluded. IFI is assessed annually on 1 January on the net value of real property assets where the net value exceeds €1.3 million. Non-residents are subject to IFI only on French-situs real property and shares in companies whose value is principally derived from French real property.
| Net IFI taxable base | IFI rate |
|---|---|
| Up to €1,300,000 | 0% — below threshold, no IFI |
| €1,300,001 – €2,570,000 | 0.50% |
| €2,570,001 – €5,000,000 | 1.00% |
| €5,000,001 – €10,000,000 | 1.25% |
| Above €10,000,000 | 1.50% |
LMP (loueur en meublé professionnel) landlords may qualify for a professional asset exemption from IFI under Article 975 CGI, which exempts assets used in a professional activity that constitutes the taxpayer's principal occupation. Where the meublé activity genuinely meets the LMP conditions — receipts over €23,000 AND majority income — and the activity is conducted in a sufficiently professional manner, the IFI exemption may eliminate or significantly reduce the annual wealth tax charge. This is one of the most significant financial advantages of LMP status for high-net-worth meublé investors.
French Succession Tax Rates and Allowances
French succession tax (droits de succession) is assessed on the market value of French-situs assets transferred on death, or by lifetime gift (droits de donation). Rates and allowances depend on the relationship between the deceased and the beneficiary. The €100,000 allowance per child per parent is renewable every 15 years, making it a practical tool for gradual tax-efficient transmission during a parent's lifetime.
| Relationship | Tax-free allowance | Rate range | Key note |
|---|---|---|---|
| Spouse / PACS partner | Fully exempt (unlimited) | 0% | Since 2007 — no succession tax between spouses |
| Child | €100,000 per child per parent | 5%–45% | Allowance renewed every 15 years |
| Grandchild | €31,865 | 5%–45% | Direct line rates apply |
| Sibling | €15,932 | 35%–45% | Higher rates on smaller allowances |
| Other relatives (up to 4th degree) | €7,967 | 55% | |
| Non-relatives / unmarried partners | €1,594 | 60% | Including cohabiting partners without PACS |
Pacte Dutreil: The 75% Transmission Discount
The pacte Dutreil is one of the most powerful tools available for transmitting a professional asset at a reduced succession or gift tax cost. Under Articles 787 B and 787 C CGI, assets used in a qualifying professional activity benefit from a 75% reduction in the taxable base — effectively taxing only 25% of the market value. For LMP meublé landlords, the pacte Dutreil is potentially available where: the meublé activity qualifies as LMP; the assets are held directly or through a company that operates the meublé activity; the shareholders/heirs make collective and individual commitments to continue the activity; and the activity has been conducted for at least 2 years. The combination of LMP status and Dutreil can dramatically reduce the succession cost of a valuable meublé portfolio.
One of the most widely used estate planning techniques for French property is the démembrement de propriété — splitting ownership into bare ownership (nue-propriété) and usufruct (usufruit). A parent donates the bare ownership to their children during their lifetime while retaining the usufruct (the right to use the property and receive rental income). On the parent's death, the usufruct expires and the children acquire full ownership automatically — with no succession tax at that point, since the bare ownership transfer was already taxed. For non-resident landlords, démembrement is a legitimate planning tool that can transfer substantial property value at a fraction of the full succession tax cost.
Our English-speaking French lawyers advise non-resident property owners on IFI optimisation, succession planning, pacte Dutreil availability, and démembrement strategies for French meublé assets.
Speak with a French Property LawyerThis article is for general information only. It does not constitute legal advice. Always seek qualified French legal advice.
Key Legal References
IFI threshold and rates: net real property assets above €1.3 million subject to annual wealth tax at rates from 0.5% to 1.5%.
IFI professional asset exemption: assets used in a professional activity constituting the taxpayer’s principal occupation are exempt from IFI.
Pacte Dutreil for individuals holding property directly: 75% reduction in taxable base for qualifying professional assets transferred on death or by gift.
Pacte Dutreil for company shares: 75% reduction in taxable base for shares in qualifying companies transferred on death or by gift.
Succession between spouses and PACS partners: fully exempt from French succession tax since 2007.
EU Succession Regulation: EU residents may elect the succession law of their nationality to govern their estate, including French immovable property — but French succession tax is unaffected.
