Each year, you have to report your income as well as your bank accounts abroad to the tax authorities, and as an heir to a bank account outside France, you may not know how to regularize the situation. Picovschi lawyers guides you through the process after inheriting a bank account abroad.
International succession: what are the timelines ?
A succession is considered to be international if it involves a foreign element. Such a situation occurs when the deceased dies or possesses property in a country other than that of his nationality or residence, or when the heirs are foreign.
If the death occurred in France, the declaration of succession must be made within six months from the day of the death. Except in special cases, if it took place abroad, the heirs will have one year to deposit it. It should be clarified that the period runs from the day of death, without the tax administration having to prove the beneficiaries’ acceptance. Challenging the validity of the will or the hereditary devolution has no effect on the will. In the event of a delay, the heirs will have to pay interest and tax penalties.
The tax domicile of the deceased: what assets will be subject to taxation in France ?
The criterion of the tax domicile of the deceased is an essential criterion for the identification of taxable property in France.
If the deceased was a resident in France for tax purposes, it is then necessary to declare all of his assets, located in France and abroad, and you will inevitably have to declare the bank account(s) you inherited. The French notary then opens the estate in France and the French law subjects all assets situated in France or abroad to transfer rights free of charge, or succession rights, unless otherwise stipulated in an international agreement. Therefore, this includes the bank account you inherited.
If another country also taxes the deceased’s assets, it is necessary to check the existence of an international convention signed between the foreign country and France. There may indeed be specific taxation conditions in this respect, for example:
- If the deceased was residing abroad at the time of his death, it is necessary to find out whether his tax domicile was also abroad or in France. We will then look for the existence of two cumulative conditions, namely, whether “the heir, the legatee or the donor”:
- had his tax domicile in France at the time of death;
- and if he was domiciled in France “six years in the 10 years preceding the year of transfer”
When both conditions are met, all assets situated in France and abroad are subject to transfer duties free of charge. If only one of these two conditions is met, only the assets located in France and transmitted free of charge will be subject to registration fees in France, in the absence of contrary international provisions.
The legal definition of the tax residence is nevertheless very precise and may vary from one country to another. In view of the consequences of the determination of the tax residence on the estate, it is recommended to call upon a lawyer.
Finally, in the absence of inheritance taxes in the foreign country, and of an agreement between the latter and France, taxation will only take place in France.
We will also check the presence of real estate in France. If this is not the case, the jurisdiction will rest with the foreign notary. He will then draw up the deed of notoriety, the certificate of real estate and address them to the person in charge of the estate in the country concerned. The country in which the deceased was domiciled shall then be the sole beneficiary of the assets constituting the global estate of the deceased on the day of his death.
In addition, you will be exempt from paying transfer duties in France if your estate meets the following criteria:
- the deceased and heirs are all living outside of France
- the deceased’s property is all located abroad
These conditions are cumulative, and they alone make it possible to exempt oneself in France from the payment of transfer duties.
Failure to report your inheritance may constitute a tax evasion offense, hence the importance of having the assistance and advice of a tax lawyer in this procedure for regularizing assets held abroad.