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OVERVIEW OF TRUST REPORTING REQUIREMENTS IN FRANCE

OVERVIEW OF TRUST REPORTING REQUIREMENTS IN FRANCE

Publié le : 18/10/2023 18 octobre oct. 10 2023
Actualités pour site version anglaise

Article 14 of Act no. 2011-900 of 29 July 2011, introduced into French law a tax regime for foreign trusts with "links" to France.
What is a trust?
Often misunderstood in France, trusts are defined in Article 792-0 bis of the French General Tax Code. A trust is a fiduciary arrangement in which a grantor (or settlor) gives power to a third party, called a trustee, to hold assets on behalf of a beneficiary or beneficiaries. The terms of the trust can specify exactly how and when the assets pass to the beneficiary(ies).
Trusts are common in many countries like the United States for estate planning purposes, including family-owned businesses that could have operations in France.  This is not common practice here and creates confusion.
What are the reporting obligations in France?
French tax law introduced filing obligations for trustees (article 1649 AB of the Tax Code), notably when:
  • the settlor or at least one of the beneficiaries is resident in France for tax purposes,
  • the trust holds directly or indirectly property located in France,
These declarations aim to help prevent tax fraud and money laundering. Family trusts established for estate planning that also have French assets do not fall within these purposes but must nonetheless comply with the reporting obligations below.

 
  • Event information return due following the creation, extinction or modification of a trust (Form no 2181 Trust 1)

When: The return must be filed within one month of the event it reports (creation and termination of the trust, modification of the trust agreement—change of trustee, beneficiary….)

Content: An event return must be declared if it concerns one of the following elements:

- Identification of the trust and address
- Identification and address of the trustees, grantors/settlors and beneficiaries
- Terms of the trust
- Real estate, real estate rights, or securities in France held by the trust when none of the trust’s actors are tax residents of France (trustees, grantors, and beneficiaries).

This detail requires reviewing the trust agreement, obtaining personal information on the actors involved, and keeping this information current.

Penalties: Breaches of reporting obligations are notably subject to a fixed fine of €20,000. The settlor and certain beneficiaries considered settlors who fall within the scope of the levy are jointly and severally liable with the trustee for payment of this fine.

  • Annual declaration of the market value of the assets placed in a trust on 1 January (Form no 2181 Trust 2)

When: The return must be filed before 15 June, each year.

Content: This return includes the following information:

- Identification of the trust and address,
- Identification and address of the trustees, grantors/settlors and beneficiaries,
- Terms of the trust,
- Inventory of the trust's assets, including securities in France, when none of the actors in the trust are tax residents in France (trustees, grantors, and beneficiaries).

Penalties: Breaches of reporting obligations are punishable by a fixed fine of €20,000. The settlor and the beneficiaries who fall within the scope of the levy are jointly and severally liable with the trustee for payment of this fine (CGI art. 1754 V, 8; BOI-CF-INF-20-10-50 n° 80).

Ringlé, Roy & Associés can help you prepare these information returns for your trusts.
 
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