Inheritance planning: what no one tells you about French-American taxation
- 14 hours ago
- 4 min read
Holding assets across multiple countries has become commonplace for international executives and founders. Between residences in the United States, real estate investments in France, and heirs spread across several jurisdictions, the issue of inheritance goes far beyond a simple family transfer.
However, many still believe that assets located abroad are automatically beyond the reach of the French tax authorities. In practice, the taxation of international inheritances is based on rules of territoriality and tax residence that can lead to taxation in France, even when the deceased or the heirs live abroad.
Between France and the United States , these rules revolve around several key criteria: the tax residence of the deceased, the location of assets, and applicable international tax treaties.
The French logic: residence and territoriality
French inheritance tax is based on a simple but powerful principle: territoriality.
According to Article 750 ter of the General Tax Code:
If the deceased was a French tax resident at the time of death, their entire worldwide estate may be subject to French inheritance tax.
If the deceased is not a French tax resident, only assets located in France are in principle taxable in France.
This means that an entrepreneur based in the United States but owning real estate in France may have that property subject to French inheritance tax.
The location of assets therefore remains a central element in international estate planning.
The American system: a different logic
In the United States, inheritance tax operates according to a very different model.
The federal system provides for an estate tax with a particularly high allowance before taxation. This threshold, which is regularly adjusted, now exceeds several million dollars per person.
In many cases, inheritances are therefore not taxed at the federal level.
However, some US states apply their own estate or inheritance taxes. Therefore, taxation also depends on the state of residence at the time of death.
This structure might give the impression that American inheritance tax is more favorable than French inheritance tax. However, as soon as an estate is divided between several countries, the analysis becomes much more complex.
The role of the France-United States tax treaty
France and the United States have signed a specific tax treaty relating to inheritances and gifts in order to avoid situations of double taxation.
This agreement specifies, in particular:
which country has the primary right to tax certain assets;
how tax credits can be applied to avoid double taxation;
How to deal with situations of dual residence.
In practice, the convention does not eliminate the tax. It simply organizes the allocation of taxing rights between the two states.
Each situation must therefore be analyzed individually.
France vs USA Comparison
Criteria | France | UNITED STATES |
Inheritance tax | Yes | Federal Estate Tax |
Tax threshold | Variable allowances | Very high tax allowance |
Tax principle | Territory + residence | Estate tax based on the value of the assets |
State tax | No | Possible depending on the state |
Impact for expatriates | Assets located in France may be subject to taxation. | The rules vary depending on residence and tax status |
💡 Key takeaway: An entrepreneur based in the United States may still have their assets located in France subject to French inheritance tax.
Key considerations for international leaders
For entrepreneurs who live between France and the United States, several factors need to be analyzed beforehand:
the manager's actual tax residence;
the location of real estate and financial assets;
the structure of asset ownership (direct, via holding, via trust, etc.);
the location of the heirs.
International succession is not just about personal taxation. It can also have direct consequences on the transfer of a family business, the governance of a holding company, or the stability of an asset structure.
Comparison: France–Canada succession vs. France–USA succession
The comparison with Canada clearly illustrates the differences in systems.
Canada does not generally levy a direct tax on inheritances. However, certain tax rules may apply upon death, particularly through the taxation of unrealized capital gains.
In the United States, taxation is based on the estate tax, with a high exemption threshold but significant potential taxation beyond that.
In both cases, the presence of assets in France may trigger the application of French inheritance tax. This is why estate planning should always be considered on an international scale.
Planning ahead to protect family assets
A well-structured international succession relies on several key elements:
clarify the tax residence of the persons concerned;
organize the holding of assets;
analyze the applicable tax treaties;
drafting a will adapted to an international situation.
For international leaders, succession is not just a tax issue. It is a matter of governance, transfer, and protection of family assets.
France-USA succession: what leaders ask us most often
Does a US resident have to pay inheritance tax in France?
Yes, if the estate includes assets located in France, such as real estate or certain shares in French companies.
Is there a tax treaty between France and the United States regarding inheritances?
Yes. France and the United States have signed a specific tax treaty to avoid certain situations of double taxation in matters of inheritance.
Does the United States have an inheritance tax?
Yes. The United States has a federal estate tax, with a high exemption threshold. Some states may also have their own estate tax laws.
Can one be taxed in two countries during an international inheritance?
This can happen. However, international tax treaties make it possible to avoid or limit situations of double taxation.
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Conclusion
Inheritance tax between France and the United States is never simply a matter of comparing rates. It is based on a balance between tax residence, location of assets, international agreements, and estate planning.
Anticipating these issues not only helps to avoid unpleasant tax surprises, but also ensures a smooth transfer of assets and family businesses.
For executives who live or invest across multiple jurisdictions, international estate planning becomes a key element of wealth management strategy.
Do you live between France and North America and is your wealth spread across several jurisdictions?
Blendy assists international executives between France, Canada and the United States in the tax and wealth structuring of their activities and assets.
👉 Do you want to analyze your international situation?
Contact our team for an initial strategic discussion.
Sources:
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