International Succession: Which Law Applies When You Live Abroad and Own Assets in France?
You live in Geneva, London, Dubai or Lisbon. Your family and main home are there, but you have kept a flat in Paris, a family house in Provence or a securities portfolio with a French bank. One question inevitably arises: which law will govern your estate? That of the country where you live, that of your nationality, or that of the place where each of your assets is located?
Since 17 August 2015, the answer is mainly provided by Regulation (EU) No 650/2012 of 4 July 2012 on international successions. This text has profoundly changed the conflict-of-laws rules applicable to French nationals living abroad and to non-residents holding assets in France. It does not, however, settle everything: inheritance taxation follows separate rules, which may lead to taxation in a State whose civil law is not meant to apply.
Here is an overview of the rules you need to know, and of the levers available to you to plan ahead.
The principle: the law of the deceased's last habitual residence
Article 21(1) of the Regulation lays down a simple rule: unless otherwise provided, the law applicable to the succession as a whole is the law of the State in which the deceased had his or her habitual residence at the time of death. This rule has two major consequences.
Unity of the succession: a single law governs all assets, movable and immovable, wherever they are located. This breaks with the former French private international law, which subjected immovable property to the law of its location and movable property to the law of the last domicile, at the cost of fragmenting the estate.
A very broad scope: the law of succession governs devolution (who inherits, and in what proportions), forced heirship (the réserve héréditaire) and the disposable portion, the hotchpot and abatement of gifts, the administration of the estate, its liquidation and its distribution.
The Regulation is also universal in application (Article 20): the designated law applies even if it is the law of a State that is not a member of the European Union or is not bound by the Regulation.
Example: a French national dies in Moscow, where he had been settled for many years. His estate, including the flat he owned in Paris, is in principle governed by Russian law.
The concept of habitual residence is not defined in the text. Recitals 23 and 24 of the Regulation call for an overall assessment of the circumstances of the deceased's life during the years preceding death and at the time of death: the duration and regularity of his or her presence in the State concerned, the conditions and reasons for that presence, and the centre of his or her family and social life. The Court of Justice of the European Union has clarified that a person can have only one habitual residence within the meaning of the Regulation (CJEU, 16 July 2020, E.E., Case C-80/19). For expatriates, cross-border workers or retirees dividing their time between two countries, this characterisation is often at the heart of the debate.
Residence in a third State: the renvoi mechanism
Where the deceased's habitual residence is in a State bound by the Regulation, the law of that State applies directly. The Regulation is in force in twenty-five Member States of the European Union; Denmark and Ireland do not take part.
On the other hand, where the designated law is that of a third State, Article 34 of the Regulation requires the conflict-of-laws rules of that State to be consulted. If those rules refer back to the law of a Member State, or to the law of another third State which would accept to apply, that law will govern the succession: this is the mechanism known as renvoi.
Example: a French national who has lived for many years in Barcelona with his family will have his estate governed by Spanish law, Spain being a Member State. Had he settled in Marrakech for his retirement, the outcome would differ: since Moroccan private international law subjects the estate of a non-Muslim foreigner to his national law, the renvoi would lead to the application of French law.
The case of Switzerland, a third State within the meaning of the Regulation, deserves particular attention for the many French nationals settled in Geneva or in the canton of Vaud. The European Regulation must then be read together with the Swiss Federal Act on Private International Law (PILA), which in principle applies the law of the deceased's last domicile while allowing a foreign national to submit his or her estate to his or her national law. The coordination of the two systems, particularly for immovable property located in France, must be checked case by case.
The escape clause: manifestly closer connections
Article 21(2) of the Regulation introduces a corrective: where it is clear from all the circumstances that, at the time of death, the deceased was manifestly more closely connected with a State other than that of his or her last habitual residence, the law of that other State applies. This clause is interpreted strictly; it does not allow the law of the habitual residence to be set aside merely because another law would appear more favourable to the heirs.
Example: a French national lives in France with his family, where all his financial interests are concentrated. Seconded by his employer to a subsidiary in Bern for a six-month assignment, he dies a few days before his return. The notary handling the estate may apply French law, with which the deceased was manifestly more closely connected than with Swiss law.
Choosing the law applicable to your succession: the professio juris
The Regulation offers a valuable planning tool: any person may choose, to govern his or her succession as a whole, the law of the State whose nationality he or she possesses, assessed either at the time of the choice or at the time of death (Article 22). The chosen law may be that of a Member State or of a third State.
In the case of multiple nationalities, all are placed on an equal footing: a person who is at once French, Swiss and Lebanese may designate any one of these three laws. Only the national law may be chosen, however; it is not possible to designate, for instance, the law of the place where an asset is located.
What form must this choice take?
The choice must be made expressly in a declaration in the form of a disposition of property upon death, or be demonstrated by the terms of such a disposition: a will, a joint will or an agreement as to succession (Articles 3 and 22(2)). In practice, we recommend a will containing an explicit designation clause, drafted in unambiguous terms.
Is a choice made before 17 August 2015 valid?
Yes. Article 83 of the Regulation provides that a choice of law made before it became applicable takes effect for successions opened on or after 17 August 2015, provided it meets the conditions laid down by the Regulation or by the rules of private international law then in force. An old will nevertheless deserves to be reread in the light of the current rules.
The limits: forced heirship and the compensatory levy
Designating a foreign law does not allow you to escape entirely the protections that French law grants to children. In two judgments of 27 September 2017, the French Cour de cassation held that forced heirship does not, in itself, form part of French international public policy, unless the foreign law leaves the heirs in a situation of economic hardship or need.
The legislature reacted. Introduced by Law No 2021-1109 of 24 August 2021, Article 913, paragraph 3, of the French Civil Code establishes a compensatory levy right over assets located in France on the date of death, applicable to successions opened since 1 November 2021. Where the deceased or one of his or her children is a national of, or habitually resident in, a Member State of the European Union, and the applicable foreign law has no forced-heirship mechanism protecting children, each child may take from those assets what is needed to restore the reserved share that French law grants him or her.
Example: a Franco-American who designates the law of a US state to govern his estate, with the aim of disinheriting his children, would expose himself to those children exercising their levy over the assets he holds in France.
The role of the French notary and the European Certificate of Succession
Heirs may perfectly well entrust the settlement of the estate to a French notary, even where the deceased lived abroad and the applicable law is foreign. Since the notary is not a court within the meaning of the Regulation, he or she is not bound by the jurisdiction rules it establishes, except for the issuance of the European Certificate of Succession.
This European Certificate of Succession enables heirs, legatees, executors or administrators of the estate to prove their status and rights in the other Member States bound by the Regulation, without any further formality. It is a valuable tool when assets are spread across several EU countries.
Example: a French national dies while habitually resident in Italy and leaves a flat in Lyon. His heirs may go to a French notary, who will apply Italian law to the devolution of the estate.
Inheritance tax: an entirely separate logic
An essential and too often overlooked point: the European Regulation does not apply to tax matters (Article 1). The designated civil law determines who inherits; it says nothing about which State taxes. The same asset may thus pass under the law of one State and be taxed in another. Under French domestic law, Article 750 ter of the French Tax Code (CGI) sets the territorial scope of inheritance tax:
where the deceased was tax-domiciled in France, all movable and immovable assets, located in France or abroad, are taxable in France;
where the deceased was domiciled outside France, only assets located in France are in principle taxable, including shares in companies predominantly holding French real estate;
however, where the heir is domiciled in France on the date of death and has been so for at least six of the previous ten years, all the assets he or she receives, including those located outside France, are taxable in France.
These rules apply subject to bilateral tax treaties, of which the network is limited in inheritance matters. The Franco-Swiss inheritance tax treaty, for instance, ceased to apply to successions opened since 1 January 2015. In the absence of a treaty, the risk of double taxation is real; it is only partly mitigated by the credit, provided for in Article 784 A of the CGI, for tax paid abroad on assets located there.
Serious estate planning therefore requires reasoning simultaneously on the civil and tax fronts. For the issues specific to investments, see also our analysis of the taxation of financial assets in the context of international mobility (securities accounts, life insurance, holding companies).
Six reflexes to secure your international succession
Characterise your habitual residence, by gathering the objective elements that define it (housing, family, professional activity, social ties), particularly if you divide your time between several countries.
Identify the law applicable in the absence of a choice, taking into account any renvoi if you reside in a third State (Switzerland, the United Kingdom, the United Arab Emirates, the United States, etc.).
Consider a professio juris in favour of your national law, in a carefully drafted will, where the law of your residence does not match your objectives or creates uncertainty.
Check the consistency of your instruments: matrimonial property regime, gift between spouses, gift-partition (donation-partage), life insurance beneficiary clauses and the articles of association of any property-holding company (SCI).
Measure the tax impact of each scenario in each State concerned, taking into account the tax domicile of your heirs and whether or not a treaty exists.
Review your arrangements each time you move: a change of country of residence alone changes the law applicable to your succession.
Our firm of tax lawyers between Marseille and Geneva assists French nationals abroad and non-residents holding assets in France in analysing the law applicable to their succession, drafting their testamentary provisions and optimising their inheritance tax position, particularly in Franco-Swiss situations.
FAQ: international succession and applicable law
Which law applies to the estate of a French national living abroad?
In principle, the law of the State of his or her last habitual residence, for all assets, including those located in France (Article 21 of Regulation (EU) No 650/2012). If that State is not bound by the Regulation, its conflict-of-laws rules may refer to another law, in particular French law.
Is my real estate located in France governed by French law?
Not necessarily. Since 17 August 2015, a single law governs the whole estate, movable and immovable property alike. The Paris flat of a French national living in Spain is thus, in principle, governed by Spanish law.
Can I choose French law to govern my estate?
Yes, if you hold French nationality at the time of the choice or at the time of death. The choice must be express and made in a will or another disposition of property upon death. If you hold several nationalities, you may designate the law of any of those States.
Can I choose a foreign law to disinherit my children?
Choosing a law that does not recognise forced heirship is possible, but its effects are limited: since 1 November 2021, Article 913, paragraph 3, of the French Civil Code allows children to exercise a compensatory levy over assets located in France where the applicable foreign law has no protective forced-heirship mechanism.
What is the European Certificate of Succession?
It is a document issued in particular by notaries, which enables heirs, legatees and executors to prove their status and exercise their rights in the other Member States bound by the Regulation, without any further procedure.
Does the law applicable to my estate determine where inheritance tax will be paid?
No. The European Regulation does not apply to tax matters. Inheritance tax is governed by the tax rules of each State and by bilateral treaties. In France, Article 750 ter of the CGI makes assets located in France taxable, even where the deceased lived abroad.
Is there a tax treaty between France and Switzerland on inheritance?
No. The Franco-Swiss inheritance tax treaty ceased to apply to successions opened since 1 January 2015. Franco-Swiss successions are therefore exposed to a risk of double taxation that must be anticipated.
Eve d'Onorio di Méo
Lawyer, Certified Specialist in Tax Law
Marseille and Geneva Bars (EU/EFTA Lawyer)
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