Donation of a French immovable property to a foreign heir: transfer duties and exemptions

1. Context and Issues of the Donation of French Real Property to a Foreign Heir

The transfer of immovable property located in France to an heir of foreign nationality or residing outside France is subject to specific rules, both civil and fiscal. Private international law, combined with the General Tax Code (CGI), determines the law applicable to the succession or donation, as well as the amount of transfer taxes. The decision of the Court of Cassation of 30 March 2022 (No. 20-18.576) provides important clarification on the interpretation of the exemptions provided for in Article 795 A of the CGI.

2. Jurisprudential Analysis: The Judgment of 30 March 2022 (No. 20-18.576)

2.1. Facts and Procedure

In this case, a foreign national who was not a French tax resident had made a donation of an apartment located in Paris to his son, who was also a foreign national and non-resident. The tax authorities challenged the partial exemption from transfer taxes sought on the basis of Article 795 A of the CGI, on the grounds that the donor was not a French tax resident at the time of the donation. The Court of Appeal ruled in favour of the tax authorities, but the Court of Cassation quashed that judgment.

2.2. The Solution Adopted

The High Court held that the partial exemption provided for in Article 795 A of the CGI (an allowance of €100,000 for direct line donations) applies irrespective of the donor's tax residence, provided that the property is located in France and the donor is an individual. It also recalled that international tax treaties (notably with non-EU countries) may provide for more favourable exemptions, subject to their application.

2.3. Scope of the Decision

This judgment confirms that non-resident foreigners may benefit from the same allowances as French residents for donations of immovable property situated in France. It also clarifies the relationship between domestic law (CGI) and bilateral treaties, thereby enhancing legal certainty for foreign donors.

3. Legal Framework: Transfer Taxes and Exemptions

3.1. General Principles (CGI, Articles 750 ter, 795 A, 790 G)

• Article 750 ter of the CGI: Donations of immovable property situated in France are subject to transfer taxes, regardless of the tax domicile of the donor or donee.
• Article 795 A of the CGI: An allowance of €100,000 for direct line transfers (parents, children), renewable every 15 years.
• Article 790 G of the CGI: Full exemption for family gifts of money up to €31,865 per donor and per beneficiary (subject to conditions).

3.2. Specific Exemptions for Foreigners

• International Tax Treaties: France has signed treaties with numerous countries (United States, United Kingdom, Switzerland, etc.) which may reduce or exempt transfer taxes. For example, the Franco-American treaty provides for a reciprocal exemption from inheritance and gift taxes for property situated in the other State.
• Exemption for EU/EEA Residents: Nationals of the EU or EEA may benefit from the same allowances as French residents, subject to meeting certain residence conditions (Article 795-0 A of the CGI).
• Exemption for Non-Residents outside the EU: The judgment of 30 March 2022 confirms that the €100,000 allowance applies even if the donor is a non-resident outside the EU, provided the property is in France.

4. Assistance by Maître Cécile Zakine

Maître Cécile Zakine, Doctor of Law and a lawyer specialising in real estate law and international taxation, assists you at every stage of your donation:

4.1. Advice on Private International Law

• Determination of the law applicable to the donation (the national law of the donor or the law of the place where the property is situated).
• Analysis of conflicts of laws and rules of jurisdictional competence.

4.2. Tax Optimisation

• Review of bilateral tax treaties to reduce or eliminate transfer taxes.
• Implementation of partition donations or gradual donations to optimise the transfer.
• Precise calculation of taxes due after application of allowances and exemptions.

4.3. Negotiation and Drafting of Deeds

• Drafting of the deed of donation in compliance with French law and foreign requirements.
• Negotiation with the tax authorities in the event of a dispute.

Besoin d'un conseil personnalisé ? Contactez Maître Zakine — première consultation 30 min à 45€.