Calculating French inheritance tax (“droits de succession”) in practice

Legal texts, computation methods, and worked examples (France)

French inheritance tax can be a shock for readers who have not been exposed to the French approach to wealth transmission. In many situations, the tax is not merely symbolic: it can represent tens of thousands of euros for a child, and far more for siblings, distant relatives, or non-relatives. This is not an accident of the system. French “fiscalité” is traditionally built around the idea that taxation is a normal and legitimate instrument of public policy, used to finance public services and, in certain areas, to shape behaviour. In the inheritance space, the policy choice is clear: the law strongly favours transmission within the immediate family (and within the couple), and it penalises transmission outside that circle through high rates and limited allowances.

To understand and anticipate the amounts involved, it is essential to understand one foundational principle.

In France, inheritance tax is computed beneficiary-by-beneficiary, on the net share each beneficiary actually receives, after exemptions and allowances, using a rate scale that depends on the relationship with the deceased.

I. What is being taxed, and how is the system structured?

French inheritance tax belongs to the broader category of “droits de mutation à titre gratuit”.

The practical consequence is that there is no single “estate tax bill” computed at the estate level. Instead, each beneficiary is taxed on their own “part nette taxable” (taxable net share).

This is why the same estate can generate radically different tax outcomes depending on who receives what, and how the assets are allocated.

A second essential point is that notarial fees and inheritance tax are different items. Notarial fees cover professional remuneration and formalities; inheritance tax is paid to the Treasury.

II. Territorial scope: when does France tax the succession?

Before computing anything, one must determine whether France has taxing jurisdiction.

The central rule is article 750 ter of the French Tax Code (CGI). It governs when French inheritance tax applies by reference to (i) the tax domicile of the deceased, (ii) the situs of assets, and (iii) in certain cases, the tax domicile of the beneficiary, including the well-known condition based on having been tax-resident in France for at least six years out of the ten years preceding the transmission.

Important: international situations can trigger double taxation, and tax treaties (where they exist in inheritance matters) may modify the domestic result. Domestic rules are applied in practice subject to treaty provisions.

III. Step 1: Determine the taxable estate (“actif brut”) — valuation rules

A. Real estate: market value at the date of death

Real estate must be valued at its “valeur vénale réelle” at the date of the transfer, in accordance with article 761 CGI. This is a frequent source of disputes, because the administration expects a defensible market valuation supported by comparable transactions and a coherent method.

B. Movable property and household contents (“meubles meublants”)

French law provides statutory methods to value movable property for inheritance tax purposes. Under article 764 CGI, the taxable value of movable property may be determined through various mechanisms, and practice often revolves around whether an inventory is prepared and whether a lump-sum valuation is applied.

For household contents, the well-known practical reference is the forfait, often described as a minimum 5% approach in the absence of contrary evidence; the administration and professional practice highlight that an inventory may be useful when real value is lower than the forfait.

C. Usufruct and bare ownership: statutory scale

When assets are held in usufruct/bare ownership, valuation is generally determined using the statutory scale set by article 669 CGI, which allocates value based on the usufructuary’s age (for life usufruct) or duration (for temporary usufruct).

IV. Step 2: Determine the deductible liabilities (“passif déductible”)

A. The principle: debts existing at death and duly justified

Article 768 CGI provides the core rule: debts borne by the deceased are deductible for inheritance tax purposes when their existence at the date of death is established and justified.

B. Statutory exclusions: non-deductible debts

French law also lists debts that are, in principle, not deductible, notably through article 773 CGI, which contains anti-avoidance mechanisms designed to prevent artificial liabilities from eroding the tax base.

C. Funeral expenses: a capped deduction

Funeral expenses are deductible, but capped under article 775 CGI, which is commonly understood and applied in notarial practice as a ceiling mechanism.

V. Step 3: Allocate the net estate to beneficiaries (civil law drives the tax base)

Once the net estate is established (assets minus deductible liabilities), the net value must be allocated between beneficiaries according to the civil rules applicable to the succession: legal devolution (intestacy), wills, matrimonial regime liquidation, and any relevant civil law options. The tax computation follows the allocation.

This is where the French approach becomes highly technical in practice: the tax base is built on the civil distribution of rights, then adjusted through tax allowances and tax scales.

VI. Step 4: Apply exemptions and allowances (“exonérations” and “abattements”)

A. Spouse and PACS partner: full inheritance tax exemption

The surviving spouse and the PACS partner are fully exempt from inheritance tax under article 796-0 bis CGI. This is the most powerful exemption in the system and explains why many computations begin by identifying whether the surviving partner receives assets and under which civil law mechanism.

B. Siblings: potential exemption subject to strict cumulative conditions

A sibling may be exempt under article 796-0 ter CGI, but only if strict cumulative conditions are met (marital status, cohabitation requirements, age or disability conditions, etc.). In practice, this exemption must be handled cautiously because it is fact-sensitive and interpreted strictly.

C. Allowances depend on relationship; the taxable share is computed after allowance(s)

Allowances are primarily set by article 779 CGI, with a fallback mechanism in article 788 CGI when no other allowance applies.

In standard cases, the frequently used figures include: the €100,000 allowance in direct line (child/parent), the €15,932 allowance between siblings where the full sibling exemption does not apply, the €7,967 allowance for nephews/nieces, and the €1,594 fallback allowance when no other allowance is available. A specific additional allowance for disability may apply and may cumulate with the relationship allowance.

The operational formula used in practice is simple but decisive: “Taxable share = net share received − personal allowance(s).”

VII. Step 5: Apply the correct rate scale (“barème”) to each beneficiary’s taxable share

A. Direct line (children/parents): progressive scale

The progressive scale is provided by article 777 CGI, with marginal rates by bracket.

B. Siblings, distant relatives, and non-relatives: steep or flat rates

Article 777 CGI also contains the tariff applicable outside the direct line, including the sibling rates and the flat rates for more distant relatives and non-relatives. This is why transmission to non-relatives can become extremely expensive very quickly, even for moderate amounts.

VIII. The “modes de calcul”: the repeatable computation method

A reliable computation follows a stable sequence.

First, territoriality must be validated under article 750 ter CGI, because the tax base can be worldwide or limited to French-situs assets depending on residence and facts.

Second, assets must be valued and documented, including real estate valued at market value pursuant to article 761 CGI, and movable property valued under article 764 CGI where relevant.

Third, liabilities must be reviewed to identify what is deductible under article 768 CGI and what is excluded by article 773 CGI, with funeral expenses handled under article 775 CGI.

Fourth, the net estate is allocated under civil law.

Fifth, for each beneficiary, one checks whether an exemption applies, notably spouse/PACS exemption under article 796-0 bis CGI or, potentially, sibling exemption under article 796-0 ter CGI.

Sixth, allowances are applied, primarily under article 779 CGI, and, if relevant, article 788 CGI.

Seventh, one computes the taxable share and applies the correct tariff under article 777 CGI.

Where the scale is progressive, the computation must be done bracket by bracket. In other words, the tax is not computed by applying a single headline rate to the entire taxable share; rather, each portion of the taxable share falling into a bracket is taxed at that bracket’s marginal rate, and the totals are aggregated.

IX. Worked examples with numbers (and the reason amounts can be surprising)

Example 1: One child receives €300,000 net (no spouse share, no prior gifts)

Assume a child receives €300,000 net. The direct-line allowance is €100,000 (article 779 CGI). The taxable share is therefore €200,000.

Applying the progressive scale in article 777 CGI, the tax is computed marginally. On the first €8,072, tax is 5% (€403.60). On the next €4,037, tax is 10% (€403.70). On the next €3,823, tax is 15% (€573.45). The remaining €184,068 is taxed at 20% (€36,813.60). The total is approximately €38,194 (rounding conventions may apply).

This is often the first “surprise” for readers: even in a direct line, the tax becomes material once the allowance is exhausted, and it grows as the taxable share increases.

Example 2: A sibling receives €100,000 net and does not qualify for the full sibling exemption

Assume a sibling receives €100,000 net and does not meet the strict conditions of article 796-0 ter. The standard sibling allowance under article 779 CGI is €15,932, so the taxable share is €84,068.

Under article 777 CGI, the sibling scale is 35% up to €24,430 and 45% above. The tax is therefore €8,550.50 on the first tranche and €26,837.10 on the remainder, for a total of approximately €35,388.

This is the second major surprise: outside the direct line, the French system becomes significantly steeper.

Example 3: A non-relative receives €100,000 net by will

Assume a non-relative receives €100,000 net. If no other allowance applies, article 788 CGI provides a fallback allowance of €1,594, leaving a taxable share of €98,406.

Under article 777 CGI, transfers to non-relatives are taxed at 60%, which produces a tax of approximately €59,044.

This illustrates the policy choice mentioned in the introduction: France strongly discourages transmission to “strangers” from a tax standpoint.

X. Special computations that can materially change the outcome

A. Prior gifts and the 15-year look-back: “rappel fiscal”

French law can require adding back certain prior gifts for the purpose of computing inheritance tax. This is governed by article 784 CGI, which establishes the “rapport fiscal” mechanism for gifts made by the deceased to the same beneficiary, with a practical time horizon commonly described as fifteen years.

This point is crucial in planning terms because it affects the availability of allowances and the effective tax progression.

B. Business transmissions: the Dutreil regime

Transfers of qualifying business interests can benefit from a major partial exemption. In simplified terms, articles 787 B and 787 C CGI provide a 75% exemption (i.e., taxation on only 25% of value) for qualifying company shares (787 B) or qualifying business assets in certain structures (787 C), subject to strict conditions.

C. Life insurance: separate tax routes (two principal legal tracks)

Life insurance is frequently misunderstood because it may follow dedicated rules distinct from “classic” inheritance tax.

For certain death benefits, article 990 I CGI provides a specific mechanism, with a widely referenced allowance per beneficiary and specific rates above that allowance.

For premiums paid after the insured’s 70th birthday, article 757 B CGI applies a different approach, including the well-known global allowance of €30,500 for the relevant premium base and taxation thereafter according to relationship-based inheritance rules.

The practical point is that life insurance is not a single-line answer: the applicable regime depends on the factual chronology of premiums and the statutory framework engaged.

XI. Filing deadlines: computation is useless if deadlines are missed

French inheritance tax is deadline-driven. Article 641 CGI provides the baseline deadlines for filing the inheritance return, including the widely cited six-month deadline in standard domestic circumstances, with extensions in other situations.

XII. The sentence you should keep repeating to your readers

If your audience is international or unfamiliar with French fiscal culture, repeating one sentence early and often is the best way to avoid confusion:

In France, inheritance tax is assessed per beneficiary, on the net taxable share each beneficiary receives, after exemptions and allowances, using a rate scale that depends on the family relationship with the deceased.