French Trust Reporting: What Trustees Need to Know

Whilst trusts are prevalent in the UK and other common law jurisdictions, and are useful vehicles for holding and conveying assets, in France, they are viewed with suspicion because of their lack of transparency as to the beneficial owners of the assets, thus potentially preventing the correct taxation.

French tax legislation, therefore, requires annual reporting on trusts which have certain connections to France so that they can monitor those trusts containing French assets or those with French beneficiaries to ensure that the correct French tax is being levied on these assets.

Where a trust is created which includes French assets, or where the settlor, beneficiary or trustee is a French tax resident, the creation of the trust must be notified to the French tax authorities using a particular form within 30 days.  This form must also be used to report any modification of the trust, such as entry or exit of assets and addition or removal of beneficiaries and trustees, again within 30 days of the reportable event.  Where a trust is brought to an end, this must also be declared to the French tax authorities in the same 30-day window.

Additionally, there are annual reporting obligations which require the trustees to submit another type of form confirming the values of the assets in the trust as at 1 January each year.  These must be sent to the French tax authorities by 15 June of the same year.

It is the trustees’ responsibility to submit the annual declarations and to declare the creation, modification or extinction of any trust connected to France by way of assets, beneficiary or trustee.

The French tax legislation indicates that failure to make these declarations may result in a fine of 20,000 €.  It is likely that the tax authorities would look most unfavourably upon those who tried to hide the existence of a reportable trust or who made false declarations in bad faith; however, according to the legislation, late submissions can also incur fines.

It is therefore important to ensure that all trusts with a connection to France by way of location of assets or tax residency of settlor, beneficiary or trustee are reported correctly with any relevant tax paid in the timescales set out by the legislation to avoid fines being imposed.

Contact our French law solicitors today

If you have any questions or would like advice on trusts, please get in touch with our specialist French Legal Services team through this website or by calling 0330 404 0768.