French Citizens both who are resident as well as non-resident in France are taxed according to the value of their assets they hold at January 1st each year. When calculating the amount of Wealth Tax, it is based on how much wealth a household holds which includes spouse, and its very young children. Couples who are not married and are living together are treated as one household and the liability of a dependant child under 18 years of age is reduced by EUR 150.
The Inheritance and gifts tax called succession tax is enforced in France. The beneficiaries of an inheritance have to pay the succession tax based on the value of their inheritance and the relationship they have to the donors. The tax is enforced when the inheritance so received is located in France or the deceased donor is a resident in France.
If the recipient is a French citizen living in France for a minimum period of 6 years of 10 years before the date of the donation or the inheritance, qualifies the inherited party to be liable for the tax cut.
France has enforced a new law since 22nd August 2007. Under which, the PACS partners and inheritance given by one spouse to the other are exempted from the Succession Tax. Nevertheless, the tax is still enforced if the inheritance is lifetime gifts. Brothers as well as sisters when they are single are also exempted from Succession Tax. Old persons who are over 50 years when the inheritances or gifts are received and are ailing are also exempted from the Succession Tax. To be exempted, they must also have lived with the deceased five years prior to his or her death.
Unmarried couples are liable to succession tax and they are treated as strangers. However, they get EUR1,642 tax allowance upon receiving the gifts. If they have a PACS agreement, the allowance is increased. If the agreement were broken due to a reason other than death or marriage within a year after it was agreed, the allowance so received would be recharged. The partners of a PACS are eligible to have 30 percent deduction from the value of the main home as a married couple.
When the children, Partners of PACS, and spouse are living in the main home, the tax on the main home can be reduced by 30 percent from the total value. When there are shares of a qualifying business, the value is deducted by 50 percent of the total value. To be exempted, the dead donor should have held the shares for at least about two years. The investors of the business should then keep them for about six years. Either party should be a director of the business or should work in the business for five years too. Succession taxes should be paid within six month of the owner of the assets death.