French civil partnerships (pacte civil de solidarité or PACS) have benefitted from the same inheritance tax and gift tax rules applicable to married couples since 22 August 2007.
However, although UK marriages have always been recognised in France for the purposes of these rules, UK civil partnerships have not. This meant that a partner in a UK civil partnership would be liable to pay tax at 60% in France on any French property he received from his partner by way of lifetime gift or Will (after a very small tax free allowance of €1,570). Compare this to the position of married couples and those in a PACS who, since 2007, have been totally exonerated from inheritance tax on death and have an allowance of €79,533 on lifetime gifts.
Following a change in French law in 2009 civil partnerships registered in countries outside France are now given recognition in France providing they do not contravene French law. By way of example, a “cohabitation agreement” in Belgium is available to mixed and same-sex couples as well as those co-habiting in a platonic relationship (including members of the same family). Thus a Belgian “co-habitation agreement” between members of the same family would not be recognised in France as French law only permits civil partnerships between couples who are not related.
In 2010 the French tax authorities published further clarification on these changes and specifically confirmed that UK civil partnerships were recognised as equivalent to PACS and further, those partners in a civil partnership would benefit from the same inheritance and gift tax rules that apply to married couples and PACS couples. Evidence of the existence of a UK civil partnership would need to be provided to the French tax authorities at the relevant time and probably the simplest way to do this would be to provide a legal certificate of custom.
So far so good! It is important to remember however that in France non-married couples, whether in a PACS or a UK civil partnership, do not have the same rights as married couples in each others estates on death. Under French inheritance law (which will apply to French property owned by a couple even if the couple are not actually French residents) married couples are automatically entitled to a share in their spouse’s estate. A partner in a PACS or a UK civil partnership has no such rights under French law. However it is often possible, depending on personal circumstances, to enhance the rights on death of a non-married partner. This could be by Will or by creating the so-called right of survivorship over jointly owned property in France whereby the survivor inherits the deceased joint owner’s share. It is important to consider these matters before buying however as the survivorship clause can only be applied in the purchase document for the property: it is not available after the property has been purchased. Equally, before making a Will it is important to consider its implications with regard to French law as French succession law will apply to French owned property regardless of where the owner resides and potentially to all assets if the owner resides in France.