How does inheritance tax (droits de succession) work in France?

France levies inheritance tax (droits de succession) on assets received from a deceased person. The tax applies to assets located in France if neither the deceased nor the heir was a French resident, or to worldwide assets if either was a French resident. The rate depends on the relationship between the deceased and the heir.

For direct-line heirs (children, grandchildren, parents), a tax-free allowance of €100,000 applies per heir per parent. Above this, rates are progressive: 5% up to €8,072, then rising through several bands to 45% on the portion above €1.8 million. Spouses and civil partners (PACS) are fully exempt from inheritance tax in France since 2007.

For siblings, the allowance is €15,932 and rates are 35% up to €24,430 and 45% above. For other relatives, allowances are lower (€7,967 for nieces and nephews) with a flat rate of 55%. Unrelated heirs receive only a €1,594 allowance and pay at 60%.

Life insurance policies (assurance-vie) are a commonly used tool to pass wealth outside the succession, as they have their own separate tax regime with more generous allowances depending on when premiums were paid.