French Inheritance Tax: Rates & Allowances

How French inheritance tax is calculated (the steps)

French inheritance tax (droits de succession) is not charged on the estate as a whole. It is charged share by share: each heir is taxed separately on what they personally receive, at a rate and with an allowance that depend entirely on their relationship to the deceased. A surviving spouse pays nothing; a child pays on a gentle progressive scale after a €100,000 allowance; a nephew or an unrelated friend can pay well over half of what they inherit. The same estate can therefore produce wildly different tax bills depending on who inherits, and understanding the calculation is the only way to see that in advance.

The calculation runs through a fixed sequence, and every French estate follows it. Getting each step right — and in the right order — is what separates an accurate figure from a nasty surprise when the tax return falls due six months after the death.

Two features of this sequence catch foreign owners out. The first is that the €100,000 allowance and the low tax bands are personal and renewable: a parent who gives €100,000 to a child and survives fifteen years hands over that sum tax-free and still leaves the full allowance available at death. The second is that the tax attaches to the relationship, not the asset — so the identity of the heir, more than the size of the estate, drives the bill.

Allowances by relationship (children, grandchildren, siblings, others)

Before any tax is charged, each heir deducts a personal allowance fixed by law according to how closely they were related to the deceased. The closer the relationship, the larger the allowance; a surviving spouse or PACS partner needs no allowance at all because they are exempt. These allowances are the single most valuable feature of the French system for an ordinary family, because the €100,000 available to each child means most modest estates passing to children attract little or no tax.

The allowances that apply on a death are set out in the General Tax Code, and each is tied to a specific provision. The table below collects the figures the law fixes, with the article that grants each one.

The €100,000 direct-line allowance is the anchor of the whole system. It applies to the share of each living or represented child and to the share of each parent (Article 779, I of the General Tax Code). Where a child has died before the deceased and grandchildren inherit in that child's place by representation, they do not each get a fresh €100,000: they share the €100,000 the predeceased child would have had, divided between them according to the rules of legal devolution (Article 779, I, paragraph 2).

Grandchildren: a point that trips up families

Grandchildren are the classic trap. It is often assumed that a grandchild has a €31,865 allowance against inheritance tax. That figure is real, but it is the allowance for lifetime gifts from a grandparent to a grandchild (Article 790 B of the General Tax Code), not for inheritance. When a grandchild actually inherits on a death of their own right — for example as a legatee named in the will while their own parent is still alive — they have no special family allowance and fall back on the general €1,594 allowance available to any heir who has no other (Article 788, IV). The €100,000 direct-line allowance only reaches a grandchild where they step into a predeceased or renouncing parent's place by representation, and even then it is the parent's single €100,000 shared among them, not one each. This distinction between gift and inheritance, and between inheriting in one's own right and by representation, changes the tax dramatically, and it is worth confirming before a will leaves anything directly to grandchildren.

The disabled-person allowance stacks on top

One allowance is different in kind. A specific allowance of €159,325 is deducted from the share of any heir, legatee or beneficiary who is unable to work under normal conditions because of a physical or mental infirmity (Article 779, II of the General Tax Code). It is not a substitute for the ordinary family allowance — it is added to it. A disabled child therefore deducts €100,000 as a child and €159,325 as a disabled person, a combined €259,325, before any tax is charged. Because it attaches to the person rather than the relationship, the same disabled heir can claim it on each separate inheritance or gift they receive, whether from a relative or a stranger.

The rate scale (barème)

Once the allowance has been deducted, the net taxable share is run through a rate scale. In the direct line — the tax most families actually face — that scale is progressive: the first slices of the taxable share are taxed lightly, and only the parts above each threshold move up into the higher rates. The rate that applies is the one in force at the date of death (Article 777 of the General Tax Code), and the base is rounded to the nearest euro before the scale is applied (Article 1649 undecies).

This is the direct-line scale that applies between parents and children (and, for gifts, between spouses and PACS partners). Each band applies only to the portion of the taxable share that falls within it.

The practical effect of the scale is that the marginal 20% band is very wide — it runs from €15,932 all the way to €552,324 — so the great majority of direct-line inheritances are taxed at an effective rate far below the headline 45%. A child inheriting a net taxable share of, say, €300,000 after their €100,000 allowance pays 5% on the first €8,072, then 10%, then 15% on the next thin slices, and 20% only on the large balance above €15,932, giving a bill of about €58,194 — an effective rate of roughly 14.5% on the €400,000 gross share, not 20% and certainly not 45%.

Inheritance tax between spouses and PACS partners

A surviving spouse pays no French inheritance tax. Since deaths occurring on or after 22 August 2007, the surviving spouse and the partner of a PACS (pacte civil de solidarité) are wholly exempt from inheritance tax on everything they inherit (Article 796-0 bis of the General Tax Code). It does not matter whether they inherit a quarter, a half, the usufruct of the whole estate or the entire estate: the duty on their share is nil.

This exemption is one of the most important planning facts about French succession, and it is frequently underappreciated by foreign couples who assume that inheritance tax will apply between them as it might in their home country. It does not. Whatever passes to the survivor — by the ordinary rules of devolution, by will, by a gift between spouses, or by the matrimonial regime — reaches them free of French inheritance tax.

Two qualifications are worth keeping in mind. First, the exemption is for inheritance tax on a death; the progressive scale between spouses and PACS partners survives only for lifetime gifts between them, which remain taxable after a separate gift allowance. Second, a PACS partner is exempt only where the PACS is in place at the death; unlike a spouse, a partner has no automatic right to inherit at all unless the deceased has provided for them by will, so the exemption protects what the will gives them but does not create a share. The practical lesson is that the exemption is generous but conditional, and a couple who are neither married nor in a PACS — cohabitants — get none of it: the survivor is treated as a stranger and taxed at 60%, which is often the single strongest reason for an unmarried couple owning French property to formalise their status.

Inheritance tax for siblings, nieces and nephews

Once you move outside the direct line and the spouse, the tax rises steeply. Brothers and sisters get an allowance of €15,932 each and are then taxed on a two-band scale — 35% up to €24,430 of taxable share, and 45% on anything above that (Articles 779, IV and 777 of the General Tax Code). There is no gentle progression here: even a modest inheritance between siblings quickly reaches the 45% band.

There is one important relief. A brother or sister can be entirely exempt from inheritance tax where they were, at the death, single, widowed, divorced or separated, over 50 or unable to work, and had lived continuously with the deceased for the five years before the death (Article 796-0 ter of the General Tax Code). Where those conditions are met the sibling pays nothing; where they are not, the €15,932 allowance and the 35%/45% scale apply.

Nephews and nieces

A nephew or niece who inherits of their own right — that is, not by stepping into a predeceased parent's place — has an allowance of €7,967 and is then taxed at a flat 55% (Articles 779, V and 777 of the General Tax Code). The 55% rate is the tariff for relatives up to the fourth degree, and it applies to the whole net taxable share without any progression.

The position changes if the nephew or niece inherits by representation of a parent — a brother or sister of the deceased — who has died before, or renounced. In that case French tax law treats them as standing in that sibling's shoes: they share the sibling's €15,932 allowance, divided between the representatives, and are taxed on the sibling scale of 35% and 45% rather than at 55% (Article 779, IV, paragraph 2). Representation on the tax side operates only where the deceased's estate passes without a will (an ab intestat succession) and where there is more than one line of nephews and nieces; with a single line it does not apply, and the nephews or nieces are taxed in their own right at 55%. This is a genuinely technical area, and the same nephew can face very different tax depending on whether they inherit directly or by representation.

Remote relatives and unrelated heirs

Beyond the fourth degree, and for anyone unrelated to the deceased, the rate is a flat 60% (Article 777 of the General Tax Code), and there is no family allowance — only the general €1,594 that any heir can claim where they have no other (Article 788, IV). A cohabiting partner who is neither married nor in a PACS, a friend, a godchild, a step-child who was never adopted: all of these are taxed at 60% on almost everything they receive. It is the single harshest figure in the French system, and it is why leaving French assets to anyone outside the close family almost always calls for advice before the will is drawn.

How assets are valued

The tax is only as reliable as the values that feed it, and French law fixes both the moment and the standard of valuation. Every asset in the estate is taken at its open-market value (valeur vénale) at the date of death — the price it would fetch if sold on that day (Article 666 of the General Tax Code). Debts owed by the deceased at death are deducted, so the tax is charged on the net estate, not the gross.

For most assets this is straightforward: a bank balance is its figure on the day, listed shares are taken at their quoted value, and a business or a fund is valued on established principles. Real estate is the asset that most often needs care, because it must be declared at its true market value and the tax authority can challenge an under-declaration for years afterward. Two special valuation rules matter enough to a family home and to any split ownership that they deserve to be understood in advance.

The 20% reduction on the main home

Where the property that was the deceased's main residence at death is also, on that date, occupied as a main home by the surviving spouse, the PACS partner, or one or more of the deceased's (or their spouse's or partner's) minor or protected-adult children, a reduction of 20% is applied to its open-market value before the tax is calculated (Article 764 bis of the General Tax Code). The abatement is not available where the deceased lived alone in the home, or where their main residence was different from that of the spouse or children. It is specific to inheritance and does not apply to lifetime gifts.

Split ownership: usufruct and bare ownership by age

French estates very often involve property that has been split between a usufruct (the right to use an asset and take its income for life) and the bare ownership (the underlying title). When such an asset is transmitted, the two halves are not valued at guesswork: the law fixes their respective values by a statutory scale set according to the age of the usufructuary at the date of transmission (Article 669, I of the General Tax Code). The older the usufructuary, the smaller the usufruct is deemed to be worth and the larger the bare ownership. For a usufructuary in their early-to-late sixties, for instance, the usufruct is valued at 40% of full value and the bare ownership at 60%; for a usufructuary in their fifties the usufruct is worth 50%. The scale means that the bare owner — usually a child — is taxed only on the fraction the scale attributes to the bare ownership, and when the usufructuary later dies the bare owner's title expands to full ownership with no further inheritance tax.

A usufruct granted for a fixed number of years rather than for life is valued differently: at 23% of full value for each ten-year period, without fractions, and never above the value a life usufruct would have (Article 669, II of the General Tax Code). And the surviving spouse's lifetime right to occupy the family home is valued, for tax, at 60% of the usufruct value produced by the Article 669 scale (Article 762 bis). These valuation mechanics are what make split-ownership planning — a gift of bare ownership during life, or a usufruct left to a surviving spouse — so effective at reducing the tax that eventually falls on the next generation.

A worked example

The clearest way to see the calculation is to run two heirs through it on the same facts and watch how different the results are. Take an estate with a net value of €400,000 after debts, and compare what a child pays with what a nephew pays on an equivalent share.

A child inheriting €400,000

The child starts with a gross share of €400,000 and deducts the €100,000 direct-line allowance (Article 779, I), leaving a net taxable share of €300,000. The direct-line scale is then applied band by band:

The child's tax is about €58,194 on a €400,000 inheritance — an effective rate of roughly 14.5%. The same figure can be reached with the standard shortcut that the tax authority uses for the 20% band: 20% of the €300,000 taxable share, less the fixed adjustment of €1,806 for the lower bands already accounted for, gives €58,194. If the estate had passed to two children instead of one, each would take €200,000, deduct their own €100,000, be taxed on €100,000, and pay far less between them — a direct illustration of why the number of heirs matters.

A nephew inheriting a comparable share

Now take a nephew inheriting a share of €75,000 in his own right. He deducts the €7,967 nephew allowance, leaving €67,033, and is taxed at the flat 55% rate for relatives up to the fourth degree — a tax of about €36,868 on €75,000, an effective rate close to 49%. Where instead a beneficiary inherits €75,000 by representation of a predeceased sibling of the deceased, the sibling scale applies: after the €15,932 sibling allowance the taxable share is €59,068, taxed at 35% on the first €24,430 (€8,551) and 45% on the remaining €34,638 (€15,587), a total of €24,138. The three results — €58,194 for a child on €400,000, €24,138 for a sibling's representative on €75,000, and about €36,868 for a nephew of his own right on €75,000 — show how completely the relationship, rather than the amount, drives the bill.

Frequently asked questions about French inheritance tax

How much is French inheritance tax?

It depends entirely on who inherits. A surviving spouse or PACS partner pays nothing (Article 796-0 bis of the General Tax Code). A child deducts a €100,000 allowance and is then taxed on a progressive scale from 5% to 45%, which for most inheritances gives an effective rate well below 20% (Articles 779 and 777). Siblings pay 35% then 45% after a €15,932 allowance; nephews and nieces 55% after €7,967; and remote or unrelated heirs a flat 60%. The relationship, not the size of the estate, is what sets the rate.

What is the allowance for children?

Each child can inherit up to €100,000 free of inheritance tax before any duty is charged, and the same €100,000 allowance applies to each parent who inherits (Article 779, I of the General Tax Code). The allowance is personal to each child and is renewed once every fifteen years, so a parent can also give a child €100,000 tax-free during life and, if they survive fifteen years, still leave the full allowance available at death.

Do spouses pay inheritance tax in France?

No. A surviving spouse and a PACS partner are wholly exempt from French inheritance tax on everything they inherit, for deaths since 22 August 2007 (Article 796-0 bis of the General Tax Code). It makes no difference whether the survivor takes a quarter, a half, the usufruct of the whole estate or the entire estate — the duty on their share is nil. Unmarried cohabitants get no exemption and are taxed at 60%.

How is French inheritance tax calculated?

The estate is valued at open-market value at the date of death and reduced by the deceased's debts (Article 666); it is divided into each heir's share; gifts of the last fifteen years are added back (Article 784); each heir deducts their personal allowance (Article 779); and the rate scale for their relationship is applied to what remains (Article 777). The tax is personal to each heir, and the declaration and payment are normally due within six months of the death (Article 641 of the General Tax Code).

Are there allowances for grandchildren and siblings?

Each brother or sister has an allowance of €15,932 (Article 779, IV), and can even be exempt where they lived with the deceased and meet the conditions of Article 796-0 ter. Grandchildren are more limited: the well-known €31,865 grandchild allowance is for lifetime gifts (Article 790 B), and a grandchild who inherits on a death in their own right generally has only the general €1,594 allowance (Article 788, IV) — unless they step into a predeceased parent's place by representation, in which case they share that parent's €100,000 direct-line allowance.

Is there an allowance for a disabled heir?

Yes. An heir who is unable to work under normal conditions because of a physical or mental infirmity deducts an additional €159,325 from their share (Article 779, II of the General Tax Code). It is added to — not substituted for — any family allowance, so a disabled child deducts €100,000 as a child and €159,325 as a disabled person before any tax is charged.

What rate applies to nephews, nieces and unrelated heirs?

A nephew or niece inheriting of their own right pays a flat 55% after a €7,967 allowance (Articles 779, V and 777). Anyone beyond the fourth degree, and anyone unrelated — a cohabiting partner, a friend, an unadopted step-child — pays a flat 60% with only the general €1,594 allowance (Articles 777 and 788, IV). These are the harshest rates in the system and are the usual reason to take advice before leaving French assets outside the close family.

How our French lawyers help with French inheritance tax

The tax on a French estate turns almost entirely on who inherits, and the levers that reduce it — the €100,000 allowances, the spouse exemption, split ownership by age, the fifteen-year gift cycle — all have to be pulled before the death, not after. We advise heirs, spouses and owners on exactly what tax will fall on a French estate, how each heir's allowance and rate apply, and how to structure a will, a gift, or the ownership of French property so that the right people inherit at the lowest cost the law allows.

This article is for general information only. It does not constitute legal or tax advice and does not create a lawyer-client relationship. How French inheritance tax applies depends on the family, the assets, their value and location, and any will, gift or matrimonial arrangement. Contact our French lawyers for advice on your situation before acting.