Have you inherited an asset, an investment portfolio, or a bank account in France? It’s important to understand the practical process for realizing an inheritance in France and transferring assets or funds to Israel. This is a complex process involving several stages that require understanding both French and Israeli law.
The main goal is not only to transfer the inheritance to Israel but to do so in the most tax-efficient way, while addressing legal issues in both France and Israel, as well as banking and regulatory matters.
During the inheritance realization process, many questions arise that need to be addressed. For example, whether it’s better to realize a certain asset in France or transfer it to Israel, whether it’s advisable to establish a trust, how to transfer inheritance funds from France to a bank account in Israel, and more.
Inheritance Tax in France – What You Need to Know?
In France, inheritance tax (not estate tax) applies to assets received by the heir, according to French law. The tax is progressive, and its rate can reach up to 60% of the inheritance value, depending on the family relationship, the value of the inheritance, and the tax residency of the parties.
When will heirs be required to pay inheritance tax when realizing the inheritance?
- If the deceased was a resident of France, all assets (in France and abroad) transferred by inheritance are subject to inheritance tax.
- If the heir is a resident of France (at the time of transfer and for more than 6 out of the last 10 years) – all assets (in France and abroad) transferred by inheritance are subject to inheritance tax.
- If neither the deceased nor their heirs are residents of France, only assets located in France are subject to inheritance tax.
Inheritance Tax Rates in France
- If the heir is the spouse of the deceased, they are exempt from inheritance tax.
- Siblings of the deceased are exempt from inheritance tax if they meet one of three conditions: single/widowed/divorced/separated at the time of death; over 50 years old/disabled at the time of death; lived continuously with the deceased for five years preceding their death.
- If the heirs are the deceased’s children or parents, there is a personal exemption of €100,000. The tax rate ranges from 5% for inheritance up to €8,072, to 45% for inheritance over €1,805,677.
- If the heirs are the deceased’s siblings, there is a personal exemption of €15,932. The tax rate ranges from 35% for inheritance up to €24,430, to 45% for inheritance over this amount.
- If the heirs are other relatives up to the fourth degree of the deceased, for nieces and nephews, a personal exemption of €7,967. Fixed tax rate of 55%.
- If the heirs are distant relatives or others of the deceased, the fixed tax rate of 60%.
- Heirs with disabilities – additional exemption of €159,325 (if certain conditions are met).
These rules highlight the complexity of inheritance taxation in France, especially in terms of the residency of the deceased and heir, exemptions, valuation, and more. Understanding French law is essential for heirs liable for inheritance tax.
What does this mean? If you received an inheritance in France, you may be required to pay inheritance tax in France, even if you are not a resident of France. Therefore, it’s important to prepare accordingly.
Practical Information on Realizing an Inheritance in France
To realize an inheritance in France, documents such as the deceased’s death certificate, a will (if one exists), copies of the heirs’ ID cards, Asset ownership documents, bank account confirmations, and more are typically required.
Note that the process of realizing an inheritance from France can take between several months to a year or more, depending on the complexity of the deceased’s estate, the number of heirs, the existence of a will, etc.
Inheritance Taxation in Israel Compared to France
In Israel, unlike in France, there is no estate tax or inheritance tax. Nevertheless, in certain circumstances, taxes may apply to the full value of inherited assets – for example, capital gains tax may be levied upon the sale of an inherited asset.
The tax treaty between Israel and France includes provisions that can prevent double taxation, but it is important to plan the reporting and filing accurately to avoid double payment.
To read the treaty in French on the Ministry of Finance website, click here.
7 Steps for Proper Realization of Inheritance
1. Clarification of Factual and Legal Background
First, check the type of asset to be inherited, its location, the identity and status of the heirs, the value of the asset, and more.
2. Checking the Timing and Location of Inheritance Realization
Consider whether it is advisable to realize the asset now and, if so, where it is better to realize it – in France or Israel?
3. Regulatory and Banking Aspects
It is recommended to check the costs of money transfers, whether there is a need to open an account in France or another country for the purpose of transferring funds, what approvals are required, etc.
4. Planning the Asset Transfer
Consider whether to transfer the asset itself or its proceeds, and what the implications are in terms of tax, exemptions, deductions, etc.
5. Avoiding Double Taxation
In light of the existence of a double taxation prevention treaty, it is recommended to check whether there is a mechanism for crediting tax paid in France against tax liability in Israel. Make sure that the reporting is done correctly and accurately to avoid double payment.
6. Checking the Future Effects on the Asset
It is recommended to examine the future effects on the asset, for example, a future sale of the asset will often be subject to capital gains tax in Israel as well.
7. Transferring the Asset to Israel
Performing all necessary actions, submitting documents, handling matters with banks in France and Israel, and executing the asset transfer.
How Can We Help?
Nimrod Yaron & Co. has extensive experience in personally and professionally accompanying Israelis with assets or inheritances in France – from the first stage of the realization process, through dealing with authorities in France and Israel, to transferring inheritance funds to the heir’s bank account.
We work with all relevant professional entities in France and Israel and provide legal solutions both in terms of taxation and banking – tailored to the circumstances of the case.
If you have inherited an asset, our team of lawyers specializing in international taxation and inheritance law will be happy to assist you in the inheritance realization process optimally – contact us for an initial consultation.
Q&A
Is there a difference if the deceased was a resident of France or an Israeli?
Yes. If the deceased was a resident of France at the time of death – there is an obligation to pay inheritance tax on the assets they bequeathed, whether they are located in France or outside France.
If the deceased is not a resident of France, it should be checked whether the heir is a French tax resident both at the time of the asset transfer and for at least six years during the last 10 years. If so, the heir is a resident of France liable for inheritance tax on all assets received in France and abroad.
As mentioned, only if both the deceased and the heir are not residents of France – inheritance tax will apply only to assets located in France.
Do I need to pay tax in Israel on an inheritance from France?
No. There is no inheritance tax in Israel. However, capital gains tax may apply after the sale of the asset. It is important to check the recommended date for selling the inherited Asset.
How can the inheritance be realized optimally and save tax?
To realize the inheritance optimally and save unnecessary tax payments, all tax options should be examined, including utilizing exemptions, planning gifts, establishing companies, trust funds, and more.
Are there restrictions on transferring inheritance funds from France to Israel?
Yes, there are various restrictions on transferring inheritance funds from France to Israel. Additionally, you must comply with regulatory and banking requirements both in France and Israel.
What documents are required for the process of realizing an inheritance in France?
To realize an inheritance in France, documents such as a death certificate, a will (if one exists), copies of the heirs’ ID cards, Asset ownership documents, bank account confirmations, and more are required.
How long does the process of realizing an inheritance in France take?
It should be considered that the process of realizing an inheritance in France can take between several months and a year or more, depending on the complexity of the deceased’s estate, the number of heirs, the existence of a will, and other factors.
