French General Tax Code
In forceI. - 1. For the purposes of this Code, "trust" means all legal relationships created in the law of a State other than France by a person who has the status of settlor, by inter vivos deed or mortis causa, with a view to placing assets or rights therein, under the control of an administrator, in the interest of one or more beneficiaries or for the achievement of a specific objective.
2. For the purposes of this Title, the settlor of a trust means either the natural person who has set it up or, where it has been set up by a natural person acting in a professional capacity or by a legal person, the natural person who has placed assets and rights in it.
II. - 1. The transfer by gift or inheritance of assets or rights placed in a trust as well as the income capitalised therein is, for the net market value of the assets, rights or income concerned at the date of the transfer, subject to transfer duty free of charge depending on the relationship existing between the settlor and the beneficiary.
2. In cases where the classification of gift and that of succession do not apply, the assets, rights or capitalised income placed in a trust which are passed on to the beneficiaries on the death of the settlor without becoming part of his estate or which remain in the trust after the death of the settlor are subject to death duties under the following conditions:
a) If, at the date of death, the share of the property, rights or capitalised income due to a beneficiary is determined, that share is subject to death duties according to the relationship between the settlor and the beneficiary;
b) If, at the date of death, a specified share of the capitalised property, rights or proceeds is due overall to descendants of the settlor, that share shall be subject to death duties on gratuitous transfers at the rate applicable to the last bracket in Table I of Article 777 ;
c) The value of the assets, rights or capitalised income placed in the trust, net of the shares mentioned in a and b of this 2, is subject to transfer duties free of charge on death at the rate applicable to the last bracket of Table III of the same Article 777.
Without prejudice to the application of Article 784 to these duties and to the duties on transfers by gratuitous title mentioned in 1 of this II in the case of a transfer by gift, the transfer duties by death mentioned in the same 1 and in a of this 2 are collected by adding the value of the property, rights and proceeds which they tax to that of the other property included in the declaration of succession for the application of a progressive rate and for the calculation of the allowances enacted by article 779.
The duties on gratuitous transfers referred to in b and c of this 2 shall be paid and remitted to the competent public accountant by the administrator of the trust within the time limits set out in article 641, from the death of the settlor. Failing this, and where the trust administrator is subject to the law of an uncooperative State or territory within the meaning of Article 238-0 A or which has not entered into a mutual assistance agreement with France in respect of recovery, the beneficiaries of the trust shall be jointly and severally liable for payment of the duties.
By exception, where the trust administrator is subject to the law of an uncooperative State or territory within the meaning of Article 238-0 A other than those mentioned in 2° of 2 bis of the same Article 238-0 A or where the trust was set up after 11 May 2011 and, at the time the trust was set up, the settlor was domiciled for tax purposes in France within the meaning of Article 4 B, gift duties and death duties are payable at the rate applicable to the last bracket in Table III of Article 777.
3. The beneficiary is deemed to be a settlor of the trust for the purposes of this II, in respect of the property, rights and capitalised income placed in a trust whose settlor died on the date on which the loi n° 2011-900 du 29 juillet 2011 de finances rectificative pour 2011 et à raison de ceux qui sont imposés dans les conditions prévues aux 1 et 2 du même II et de leurs produits capitalisés.
