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French tax: extension of the trust reporting obligations

A new law of 12 February 2020 has extended the scope of the trust reporting obligations in France, adding a further layer of complexity to the French legislation on overseas trusts.

The reporting obligations are far reaching and the penalties for non-compliance are severe. Trustees of non-French trusts may be required to report the creation, modification and revocation of any trust with connections to France, as well as the value of the assets held by the trust every year. For more information, please click here.

1. Extended scope of the reporting obligations

Trustees to whom the legislation applies are required to report to the French tax administration in the following situations:

  • The settlor or one of the beneficiaries of the trust is a tax resident in France; or
  • One or more of the assets or rights placed in the trust are located in France; or
  • The trustee is considered as a French tax resident; or
  • From February 2020, a trustee is resident outside the European Union (e.g. UK, Jersey or Guernsey) who either:  
  1. acquires real estate assets in France, or
  2. enters into a “business relationship” in France.

According to the French Monetary and Financial Code, a business relationship exists when a professional or commercial relationship is initiated and is expected to last for a certain period of time (e.g. with French banks, avocats, notaires, accountants, etc).

2. Additional information to be disclosed in the trust returns

In addition to the usual information in relation to the settlor(s), trustee(s), beneficiary(ies), and the terms of the trust; trustees are now required to provide information in respect of:

  • any protector; and
  • any individual exercising effective control over the trust assets.

Further information

For further information, please speak to your usual Druces contact or:

Please note this article is for general information. You should not rely on it without advice on the specific facts of your case.

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