France & Australia: France ⇔ Australia: A treaty gap that families pay for
There is no bilateral inheritance or estate tax treaty between France and Australia. This single fact has significant consequences for diaspora families with connections to both countries — and most are unaware of it until it is too late.
Principle 01 — What the absence of a treaty actually means
A double taxation treaty is not merely a technical convenience — it is the mechanism by which two countries agree who taxes what, and how relief is given for tax paid to the other. Without one, both countries simply apply their own rules entirely independently.
When there is a treaty, it typically allocates primary taxing rights over specific asset classes and requires the secondary country to give credit or exemption. In the France–Australia corridor, no such allocation exists. Each country looks at the same inheritance event and applies its own domestic rules independently. There is no treaty framework to coordinate the two outcomes or provide structured relief.
A French-resident beneficiary inheriting Australian assets from a French-resident parent faces French IHT assessed on those Australian assets — with no treaty to prevent it and no automatic Australian-side credit. The absence of a treaty does not mean an absence of tax. It means an absence of coordination.
Some limited relief may be available under French domestic unilateral relief provisions, but these are narrower and less reliable than treaty protection, and their application is not guaranteed.
Principle 02 — How France asserts inheritance tax and how far it reaches
French inheritance tax can arise under three distinct scenarios. The key principle is that France can assert a tax charge based on the beneficiary’s residence alone, independently of where the deceased lived or where the assets are located.
| Deceased Residence | Beneficiary Residence | French IHT Scope | Risk |
|---|---|---|---|
| French resident | Anywhere | Worldwide assets of the deceased | High |
| Non-resident (e.g. Australia) | Non-French resident | French-situs assets only | Limited |
| Non-resident (e.g. Australia) | French resident (6-of-10 year rule) | Worldwide assets received by that beneficiary | High |
The third scenario is the one that most surprises families. A parent living in Australia with primarily Australian assets might assume their estate is outside the French system. If their child has been French-resident for a sufficient period, that assumption is incorrect.
The 6-of-10-year rule
A beneficiary who has been French tax resident for at least six of the ten years preceding the inheritance can bring their worldwide inheritance into the French charge. This is a domestic French rule — not modified by any Australia–France treaty.
The timing problem
This rule is assessed at the date of death. The beneficiary’s residence history in the preceding decade is fixed by then. It cannot be restructured after the event. Planning must occur well in advance.
Determining French tax residence involves more than counting years — it depends on home, family, professional centre of interest, and habitual abode. A child who “lives in Paris” but has other connections may or may not meet the threshold. This is a facts-and-circumstances analysis, not a simple rule.
Principle 03 — Australia abolished estate duty, but tax exposure remains
Australia’s abolition of estate duty is well known, and is sometimes mistakenly taken to mean that inheritance is tax-free in Australia. The reality is more nuanced, particularly for cross-border estates.
Australia’s federal government abolished estate duty in 1979; all states followed. There is no Australian tax levied on the inheritance itself. However, this does not mean that inherited assets are free of Australian tax consequences.
Capital Gains Tax on inherited assets
When an Australian-resident beneficiary inherits an asset and subsequently disposes of it, Capital Gains Tax (CGT) may apply on the gain accruing since the original acquisition date. The absence of estate duty does not eliminate CGT on future disposals. For long-held assets — particularly property or shares with significant embedded gains — this is a meaningful ongoing exposure.
CGT on foreign assets inherited by Australian residents
An Australian tax resident who inherits foreign assets — including French property or financial assets — may face Australian CGT on future gains from those assets, in addition to any French taxes already paid. The absence of a treaty means no structured mechanism exists to coordinate these obligations or provide credit consistently.
The practical consequence is that the absence of an Australian inheritance tax creates a false sense of security in cross-border planning. The real question is not whether Australia taxes the inheritance event, but what the total tax cost is across both jurisdictions considered together.
Principle 04 — Holding structures: do they help in a no-treaty corridor?
Families often hold assets through companies, trusts, or other structures with the assumption that this mitigates inheritance tax exposure. In the France–Australia corridor, this assumption warrants careful scrutiny.
French tax law contains specific provisions that look through certain holding structures when assessing inheritance tax. The nature of the underlying assets — not merely the legal wrapper — can determine whether French IHT applies.
Trusts receive particularly unfavourable treatment under French law. France introduced a dedicated trust taxation regime that applies where the settlor or a beneficiary is French-resident, or where the trust holds French-situs assets. The regime includes both reporting obligations and punitive tax charges that apply regardless of whether the trust actually distributes anything.
French trust regime: high-risk
An Australian discretionary trust with French-resident beneficiaries, or holding French property, is within scope of the French trust regime. Compliance failures attract severe penalties. The structure that works well domestically in Australia may create significant problems in the French context.
Companies: asset look-through risk
French tax rules can look through non-French companies to the underlying assets when those assets are predominantly French property. A company holding French real estate does not necessarily remove that property from the French inheritance charge simply because the company is incorporated elsewhere.
Planning triggers — You should be thinking about this if…
- You or your family own property in France and you or your beneficiaries have Australian connections.
- Your children have lived in France for several years — even if you are based in Australia and your assets are primarily Australian.
- Assets are held in an Australian family trust and a trustee, beneficiary, or trust asset has French connections.
- You have moved between France and Australia in the past decade and have not reviewed your estate plan since relocating.
- Your will was prepared in only one country by an adviser who works exclusively in that jurisdiction.
- You hold superannuation or investments in Australia while being or having been French tax resident.
What this guide cannot tell you
- Whether you or your beneficiaries meet the French residence threshold — this depends on your specific history and connections.
- Whether French domestic unilateral relief provisions apply to your situation — this requires specialist French tax analysis.
- The CGT cost in Australia on any inherited assets — this depends on asset type, original acquisition cost, and circumstances of disposal.
- Whether your trust or company structure triggers the French trust regime — this requires cross-border legal and tax analysis.
- What your total combined tax exposure is across both jurisdictions.
Frequently Asked Questions — France & Australia Inheritance
Is there a France–Australia inheritance tax treaty?
What is Article 750 ter and why does it matter for French-Australian families?
Does Australia’s CGT on death interact with French succession tax?
How does French forced heirship affect Australians inheriting from French parents?
What should I do first if my family spans France and Australia?
These FAQs are for general educational purposes only. They do not constitute legal, tax or financial advice. Laws change and individual circumstances vary significantly. Always consult a qualified cross-border estate specialist before making decisions.
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