News Bulletin: November 2007
Pacs and Others to Benefit Under New French Inheritance Tax
At last there good news for couples with Pacs with changes in inheritance legislation already underway. ( A Pac is a civil union for unmarried couples registered formally in a French court.)
The new law, known as TEPA (Loi du 21 aout 2007 en faveur du Travail, de l’Emploi et du Pouvoir d’Achat) will provide for generous tax exemptions for members of Pacs and should be applicable to both inheritance and gifts.
The last French tax reform (which came into force January 2007) disappointed many with regards to conditions for unmarried couples in Pacs, as they were seen as less generous than those for married couples. Under that reform, inheritance tax for the surviving spouse of a Pac provided for an exemption of 57,000 Euros as opposed to those for married couples of up to 76 000.
Though the law is not yet in force, the latest reforms will provide an equal treatment of Pacs couples and married couples — the total exemption of inheritance tax for the surviving spouse or Pacs “spouse”.
Others to Benefit
The good news does not stop there. Children inheriting from their parents are currently exempt from inheritance tax up to a limit of 50 000 Euros. When the TEPA law comes into force, children will benefit from an increase in the exemption limit to 150 000 Euros.
Brothers/sisters. Exemption of inheritance tax limits are proposed to rise from 5000 Euros to 15000 Euros. Exceptions: brothers /sisters over the age of 50 or living under the same roof and handicapped will benefit from a total exemption of inheritance tax when property passes from one to the other.
Gift taxes. The new TEPA law will increase the tax free limit for gifts from parents to their children to 150 000 Euros per 6-year period. (At the moment the maximum is set at 50 000 Euros per 6-year period)
Between spouses gifts will still be limited to 76 000 Euros and will include the same allowance for Pacs couples.