Last week, The French government has passed legislation stating that all British expats must declare any inheritance trusts in which they have been named or any they have set up for relatives in the UK, to avoid facing a fine of up to £8000.
The legislation includes those basic life insurance policies which were put into trust to minimise IHT liability. It also includes those who have put their French holiday home into a trust or who hold French assets in a trust.
Trusts can be as small as those valued at £1000 or even less, but for those worth in excess of £200,000, the imposed fine will be set at a 5% charge.
The government originally gave only a few days’ notice, requesting all information to be submitted by 15 June – which has led to many disgruntled expats calling the move “greedy” and a suspicion that it will use these fines to ease its own national debt. However, this deadline has been extended, although no one is yet sure when it will eventually fall.
Wealthy individuals are likely to be hardest hit, with those whose estate exceeds £1.05 million, still having to pay a tax bill of 0.25%-0.5% after five years of full residency in France.