Don’t miss Part 1 and Part 2 of this series on Living in France as a Retiree

France has rather rigid laws, especially when it comes to taxation and succession. They are also quite unclear. Disclaimer: I am not an attorney, nor an accountant. However, I can inform any prospective retirees on issues to look out for. I used some of my own experience, but also that of other immigrants from the US to France with different financial and family situations.

Note of caution: French attorneys and tax accountants who deal with Americans tend to ask for a lot of money, and their advice is not always crystal clear. I don’t want to make a sweeping assumption, but this has been our experience.

Another note of caution: Laws change.

No Double Taxation

Who is a French tax resident? The French government uses several factors to determine whether or not you are a resident for tax purposes. A rough rule of thumb is that if you intend to spend more than 6 months of the year in France, you will probably be considered resident for tax purposes.

The good news is that there is a treaty between the US and France, and retirement income, at the very least, is not double-taxed.

Trusts

Many Americans have trusts. France does not recognize US revocable trusts as “transparent” for tax purposes, so every time you change or take a distribution of funds held in a trust, you will have to declare it to the tax authorities within 30 days. The penalties for not doing so are steep.

The current default position is that distributions are automatically treated as income and hence taxable. The onus is on you to prove that distributions are not income and thus not taxable, which means you will need a full accounting trail of the funds. If you have a revocable trust, you should consider removing any financial assets from the trust prior to moving to France.

Joint Ownership of Property

If you are buying property jointly (e.g., you and your spouse or partner), there are three ownership options:

1. En Indivision (Standard Joint Ownership)

This is the default and most common method. Each person owns a specific share (e.g., 50/50 or 60/40) based on their financial contribution.

• Pros: Simple and flexible; reflects actual financial input.
• Cons: If one (legal) partner dies, their share is subject to French inheritance laws. This means children (including those from previous relationships) automatically inherit a portion of that share, potentially making the surviving partner a co-owner with their children or stepchildren.
• Best for couples with no children, or those who are comfortable with their children becoming immediate co-owners when one of the partners passes.

2. En Tontine (Survivorship Clause)

A specific clause is added to the sale deed stating that the survivor is deemed to have owned the entire property from the start. This needs to happen when the property purchase occurs.

• Pros: The surviving partner becomes the sole owner automatically, bypassing “forced heirship” for that specific property. The children cannot claim their share until both partners have passed away.
• Cons: It can be difficult to undo if the couple splits up, as both must agree to cancel it. There may also be higher tax implications if the property value is high and the couple is not married or in a PACS (official civil partnership)
• Recommended for unmarried couples or those with children from previous marriages who want to ensure the survivor stays in the immediate family

3. SCI (Société Civile Immobilière) (Limited Liability Company)

You set up a French LLC to buy the property. The couple (and their children) then owns shares in the company rather than the real estate itself.

• Pros: Offers the most flexibility for succession planning. Shares can be transferred more easily than real estate, and they can help non-residents manage French inheritance taxes.
• Cons: Higher setup costs and ongoing administrative requirements (annual accounts). The shares must also be declared to the IRS every year.
• Recommended for high-value properties or complex family situations where you want to avoid certain French succession rules.

Comparison of Couple Status & Protections

Status: Married

• Inheritance Tax: Exempt (0%)
• Automatic Rights: Strongest; can use a Communauté Universelle contract to protect the survivor

Status: PACS (Civil Union)

• Inheritance Tax: Exempt (0%)
• Automatic Rights: No automatic inheritance. You must write a French will, or the partner gets nothing

Status: Cohabiting

• Inheritance Tax: 60% (yes, you read that correctly!)
• Automatic Rights: None; the surviving partner is treated as a “stranger” for tax purposes

Inheritance Tax on Worldwide Income

When a French tax resident dies, their entire worldwide assets will be taxed by the French authorities. French inheritance tax rates and allowances depend entirely on the familial relationship between the deceased and the beneficiary.

• Spouse/Civil partner: Fully exempt from inheritance taxes
• Children/parents: biological, adopted: €100,000 tax-free allowance; above that threshold, a sliding scale: 5% to 45% (progressive)
• Siblings: €15,932 tax-free allowance; above that threshold, a sliding scale: 35% to 45%
• Nephews/Nieces: €7,967 tax-free allowance; above that threshold, 55%
• Unrelated/Friends: €1,594 tax-free allowance; above that threshold, 60%. This category includes unofficial life partners, as well as stepchildren you may have raised, but are not officially your children

More notes of caution:

• It is important to verify that adopted children will indeed inherit just like biological children; it isn’t always the case, especially if they were adopted as adults.
• If you have a joint bank account, the wording in the title can determine what happens upon the death of one account holder. It is best to verify this when you open an account.
• In France you cannot “disinherit” your children. If a couple jointly owns a property and one partner dies, the children of the deceased partner have automatic ownership rights on a portion of the assets and property of the deceased. This cannot be overridden by a legal contract.

The above is not a comprehensive account of all the details. However, at least this article can help retirees avoid some pitfalls and be prepared.

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