France has some of the highest inheritance taxes in Europe — up to 45% above €1.8 million in the direct line. Yet tax law offers numerous legal tools to pass on wealth while minimising the tax burden. The key: plan well in advance.
"The best estate plan is the one you start 20 years early." — Notarial adage
Inheritance Tax in France: The 2026 Scale
Inheritance tax is calculated after applying allowances based on family relationship:
| Relationship | Allowance | Applicable Tax Scale |
|---|---|---|
| Child / Parent | €100,000 per parent/child | 5% to 45% (direct line) |
| Spouse / PACS partner | Full exemption since 2007 | 0% |
| Brother / Sister | €15,932 | 35% up to €24,430, then 45% |
| Nephew / Niece | €7,967 | 55% |
| Other (non-relatives) | €1,594 | 60% |
Direct-Line Tax Scale (Children / Parents)
| Bracket (after allowance) | Rate |
|---|---|
| Up to €8,072 | 5% |
| €8,073 to €12,109 | 10% |
| €12,110 to €15,932 | 15% |
| €15,933 to €552,324 | 20% |
| €552,325 to €902,838 | 30% |
| €902,839 to €1,805,677 | 40% |
| Above €1,805,677 | 45% |
The 15-Year Gift Rule: The Key Tool
This is the simplest and most effective wealth transfer tool. You can give each of your children up to €100,000 (the statutory allowance) completely tax-free. And this allowance resets every 15 years.
Example: You have two children. You start gifting at age 45:
- Age 45: you give €100,000 × 2 = €200,000 tax-free
- Age 60: the allowances have reset → you give another €200,000 tax-free
- Age 75: a third transfer of €200,000 tax-free
Total transferred tax-free: €600,000 — entirely exempt.
Cash Gifts (Dons Familiaux de Sommes d'Argent)
In addition to the €100,000 allowance, there is a specific tax-free cash gift of €31,865 every 15 years, applicable to cash gifts to a child, grandchild, great-grandchild of legal age, or nephew/niece (without descendants). This is stackable with the main allowance.
Life Insurance: The Ultimate Outside-Estate Tool
Life insurance is legally "outside the civil estate". Each named beneficiary receives up to €152,500 entirely free of tax (for premiums paid before age 70). This cap is per beneficiary: with 3 children, you can pass on €457,500 outside the estate.
| Premiums paid before age 70 | Per beneficiary | Tax charge |
|---|---|---|
| Up to €152,500 | Exempt | 0% |
| €152,500 to €852,500 | €700,000 | 20% |
| Above €852,500 | — | 31.25% |
For premiums paid after age 70, the rules are less favourable: only a global allowance of €30,500 is granted across all beneficiaries. Beyond that, standard inheritance tax applies to the capital paid in (but not to the investment gains generated).
Usufruct and Bare Ownership (Démembrement de Propriété)
Démembrement splits a property into bare ownership (nue-propriété — the capital value) and usufruct (usufruit — the right to use the property or receive its income).
Classic strategy: parents give the bare ownership of their property to their children while retaining the usufruct until their death. At death, the usufruct extinguishes and the children acquire full ownership with no additional inheritance tax.
The taxable value of bare ownership decreases with the usufructuary's age:
| Usufructuary's Age | Usufruct Value | Bare Ownership Value (taxable) |
|---|---|---|
| Under 21 | 90% | 10% |
| 31 to 40 | 70% | 30% |
| 51 to 60 | 50% | 50% |
| 61 to 70 | 40% | 60% |
| 71 to 80 | 30% | 70% |
| Over 91 | 10% | 90% |
Example: you give the bare ownership of a flat worth €400,000 at age 60. The taxable value is €400,000 × 60% = €240,000, minus the €100,000 allowance → tax is calculated on just €140,000.
The Family SCI (Société Civile Immobilière)
An SCI (property holding company) simplifies the management and transfer of real estate assets. Key advantages:
- Progressive transfer: you give SCI shares (valued with a 10–20% discount relative to the direct property value)
- Retained control: you remain manager even after giving away the majority of shares
- Co-ownership avoided: SCI rules replace those of standard joint ownership (more flexible)
Warning: a poorly structured SCI or one with no genuine management activity may be reclassified as tax abuse by the French tax authority.
A Global Wealth Transfer Strategy
Here is an example strategy for a couple aged 55 with two children and €800,000 in assets:
- Open / fund two life insurance contracts naming the two children as beneficiaries (€152,500 × 2 × 2 parents = €610,000 transferable outside the estate)
- Make a gift of €100,000 to each child now (€200,000 tax-free)
- Place real estate assets into an SCI and begin transferring bare ownership shares
- Renew the gift in 15 years (at age 70)
Estate planning is one of the areas where a mistake can be extremely costly for your heirs. A notary specialising in wealth law is essential to validate your strategy and draft the legal documents correctly.