You set up an English family trust years ago, perhaps a discretionary trust drawn up by a London solicitor, and the trust now owns a house in the Dordogne or an apartment in Paris. In England the arrangement is routine. In France it is not. France has no domestic law of trusts, it taxes the trust as if it were transparent, and since 2011 it has built a dedicated system of disclosure duties, automatic penalties and succession charges aimed squarely at foreign trusts holding French assets. After Brexit the position of British settlors, beneficiaries and trustees has become harsher, because a trustee resident outside the European Union now falls within the disclosure duty in additional situations. This article explains, for a British reader, what France requires of your trust, what it costs when the settlor dies, and how you challenge an assessment you consider wrong. Every French term is explained at first use.

The stakes are concrete. A trustee who fails to file the French trust return faces a fixed penalty of 20,000 euros per breach. A separate yearly levy can apply to the trust assets. When the settlor dies, French succession duty can reach the top rates, and the Cour de cassation, France’s highest civil court, held in 2020 that duty is triggered when the trust assets are finally distributed to the ultimate beneficiary, even if that happens years after the death. A further ruling of February 2026 shows how the courts test the yearly levy against double tax treaties. The pages below set out the rules, the two rulings, and the remedies.

I. Does France recognise my English family trust and what must I declare

Short answer: France does not treat your trust as a person or as an owner. It looks through the trust and taxes the individuals behind it, the settlor, meaning the person who created the trust and put assets into it, the trustee, meaning the administrator who controls the assets, and the beneficiaries, meaning the persons entitled to benefit. Understanding this transparency is the key to everything that follows, because each French obligation attaches to one of these individuals rather than to the trust itself.

The starting point is that a trust is, in French tax law, defined as follows: “l’ensemble des relations juridiques créées dans le droit d’un Etat autre que la France par une personne qui a la qualité de constituant, par acte entre vifs ou à cause de mort, en vue d’y placer des biens ou droits, sous le contrôle d’un administrateur, dans l’intérêt d’un ou de plusieurs bénéficiaires ou pour la réalisation d’un objectif déterminé.” In plain terms, any legal arrangement created under foreign law, which covers every English trust, whether made during lifetime or by will, counts as a trust for French tax purposes. This definition appears at Article 792-0 bis of the General Tax Code. Do not confuse the trust with the fiducie, the French-law cousin introduced in 2007. The Civil Code says: “La fiducie est l’opération par laquelle un ou plusieurs constituants transfèrent des biens, des droits ou des sûretés, ou un ensemble de biens, de droits ou de sûretés, présents ou futurs, à un ou plusieurs fiduciaires qui, les tenant séparés de leur patrimoine propre, agissent dans un but déterminé au profit d’un ou plusieurs bénéficiaires.” That French fiducie is a contract with strict formalities, set out at Article 2011 of the Civil Code. Your English trust is not a fiducie and cannot become one by re-labelling; it stays a foreign trust governed by the special tax regime described here.

A. Is my English trust caught by the French disclosure rules

The disclosure duty is laid down at Article 1649 AB of the General Tax Code, and its scope is deliberately wide. It provides that “L’administrateur d’un trust défini à l’article 792-0 bis dont le constituant ou l’un au moins des bénéficiaires a son domicile fiscal en France ou qui comprend un bien ou un droit qui y est situé” must file, and it adds two extensions: a trustee “établi ou résidant en dehors de l’Union européenne lorsqu’il acquiert un bien immobilier ou qu’il entre en relation d’affaires en France” and any trustee who is himself tax-resident in France. Three alternative triggers therefore exist, and meeting any one of them is enough.

Apply this to the common British situations. First, the trust holds a French house. The second trigger is met on its own: the trust comprises property situated in France, so the trustee must file even if the settlor and every beneficiary live in England. Second, you are a British national who moved to France after Brexit and you are the settlor or a beneficiary of an English trust, wherever its assets lie. The first trigger is met because a settlor or at least one beneficiary has their domicile fiscal, meaning their tax residence, in France. Third, since Brexit your London-based trustee is established outside the European Union, so buying a French property or opening relations with a French bank, notary or insurer brings the trust within the duty under the third-country extension. In practice, most British-connected trusts with any French footprint are caught at least twice over.

Tax residence is the hinge of the first trigger, so it must be established precisely. Article 4 B of the General Tax Code treats as tax-resident in France persons who meet any one of three tests: “Les personnes qui ont en France leur foyer ou le lieu de leur séjour principal”, meaning those whose household or principal place of stay is in France; those who carry on a professional activity in France unless it is merely ancillary; and those whose centre of economic interests is in France. A British retiree living year-round in France, a British employee posted to Paris, or a British landlord whose main economic interests sit in France will each normally satisfy at least one test. Note the safeguard at the end of the article: a person who meets a domestic test is nevertheless not regarded as French tax-resident where a double tax treaty allocates residence to the other State. Treaty analysis therefore belongs in every file, a point to which the 2026 ruling below gives fresh importance.

On the English side of the Channel, remember that the trust may also carry British duties. Trustees of most taxable UK trusts must register on the Trust Registration Service and keep the record updated, broadly within 90 days of creation or of becoming liable to UK tax, as explained in the official guidance at Check if you need to register a trust. French and British duties are cumulative: registering in London never exempts the trustee from filing in Paris, and filing in Paris never satisfies HM Revenue and Customs.

B. What the trustee must file every year and by when

Once caught under Article 1649 AB of the General Tax Code, the trustee must declare three blocks of information. First, events: “La constitution, la modification ou l’extinction, ainsi que le contenu des termes du trust”, meaning the creation, amendment or termination of the trust and the contents of its terms. In practice the French administration expects a copy of the trust deed and of every deed of appointment, retirement of trustees or variation. Second, identities: the full names, addresses, dates and places of birth and nationalities of the effective beneficiaries, a term that covers the trustee, the settlor, each beneficiary, any protector, and any other individual exercising effective control. Third, values: “La valeur vénale au 1er janvier de l’année”, meaning the open market value at 1 January of each year, of all assets and capitalised income in the trust where a settlor or beneficiary is French tax-resident, or of the French assets only where nobody involved is French tax-resident. The exact wording continues: “Pour les personnes qui ont en France leur domicile fiscal au sens de l’article 4 B […] des biens et droits situés en France ou hors de France et des produits capitalisés placés dans le trust”, and “Pour les autres personnes, des seuls biens et droits situés en France et des produits capitalisés placés dans le trust.”

Two practical consequences follow. The valuation date is fixed by law, so a valuation prepared for English purposes at another date must be adjusted, and the French house must be valued at its open market value each 1 January, not at its purchase price. And the return is event-driven as well as annual: creating the trust, changing a trustee, adding a beneficiary, varying the deed or distributing capital each triggers a filing, on top of the yearly value return. Trustees who treat the French return as a once-only formality are the ones who discover the penalty.

The penalty is severe and automatic in design. Article 1736, IV bis, of the General Tax Code states: “Les infractions à l’article 1649 AB sont passibles d’une amende de 20 000 €.” Each breach of the disclosure article attracts a 20,000 euro fine. In a trust that has never filed, several years of omissions can therefore produce a stack of penalties that dwarfs the underlying tax. The fine is imposed on the trustee, but the economic burden usually falls back on the trust fund and ultimately on the family. Because the amount is fixed rather than proportionate, it bites hardest on modest trusts, for example a single French holiday home worth far less than the accumulated fines. This is precisely why voluntary regularisation before any audit is almost always cheaper than waiting: the duty exists from the first triggering event, interest and penalties accumulate silently, and the administration learns of trusts through notaries, banks, land registration and exchange of information.

Alongside the return sits a separate yearly levy, the prélèvement on trusts, set out at Article 990 J of the General Tax Code. Its opening words are: “Les personnes physiques constituants ou bénéficiaires d’un trust défini à l’article 792-0 bis sont soumises à un prélèvement fixé au tarif le plus élevé mentionné au 1 de l’article 977.” The levy is charged on the settlors or beneficiaries as individuals, at the highest marginal rate of the wealth-tax scale, on the trust assets within its scope: worldwide assets where the person is French tax-resident, French assets only otherwise. Exemptions exist, notably for irrevocable trusts whose exclusive beneficiaries are charities or pension vehicles, and no levy is due on assets already included in someone’s French wealth-tax base. For a British family with a French second home in trust and no French wealth-tax filing, the levy is the provision to check first, before concluding that only the return is at stake.

II. What tax is due when the settlor dies and how to challenge the bill

The death of the settlor is the moment when the French system moves from monitoring to taxing. English families often assume that because the trust continues and nobody inherits anything immediately, nothing is taxable in France. That assumption is dangerous. French law taxes the transmission of the trust assets, sometimes at the highest rates known to succession law, and the courts have settled when that tax falls due. The good news is that the same courts enforce strict procedural discipline on the administration, and recent case law gives trustees real arguments, on timing, on treaties and on proof.

A. Who pays French succession duty on trust assets and at what rate

The charging provision for territorial scope is Article 750 ter of the General Tax Code. It begins: “Sont soumis aux droits de mutation à titre gratuit”, meaning subject to gratuitous transfer duties, then lists two limbs. The first covers “Les biens meubles et immeubles situés en France ou hors de France, et notamment les fonds publics, parts d’intérêts, biens ou droits composant un trust défini à l’article 792-0 bis et produits qui y sont capitalisés […] lorsque le donateur ou le défunt a son domicile fiscal en France au sens de l’article 4 B”, meaning worldwide assets including trust assets where the deceased was French tax-resident. The second covers “Les biens meubles et immeubles, que ces derniers soient possédés directement ou indirectement, situés en France, et notamment les fonds publics français, parts d’intérêts […] lorsque le donateur ou le défunt n’a pas son domicile fiscal en France au sens de l’article précité”, meaning French-situs assets including trust assets even where the deceased lived abroad. A British settlor who retired to France and dies there leaves worldwide trust assets within French succession duty. A British settlor who always lived in Kent but whose trust holds a Provençal farmhouse leaves that farmhouse within French duty. Both limbs expressly name trust assets, so there is no escape through the argument that the trust, rather than the deceased, owns the property.

The rate and base rules sit in Article 792-0 bis itself. Its second part provides: “La transmission par donation ou succession de biens ou droits placés dans un trust ainsi que des produits qui y sont capitalisés est, pour la valeur vénale nette des biens, droits ou produits concernés à la date de la transmission, soumise aux droits de mutation à titre gratuit en fonction du lien de parenté existant entre le constituant et le bénéficiaire.” Where the transfer can be characterised as a gift or succession, duty is charged on the net market value at the date of transfer at the rate corresponding to the family link between settlor and beneficiary: parent to child rates for a family trust, higher rates for remote relatives. Where neither characterisation fits, for example assets that stay in the trust after the settlor’s death without vesting in anyone, the law imposes duty at death at the top-band rates of the statutory tables, which in practice means the maximum rate for transfers between non-relatives. Families using discretionary trusts, where no beneficiary has a fixed entitlement at the settlor’s death, must therefore assume the worst rate unless they can demonstrate a qualifying relationship and vesting.

Timing was settled by the Cour de cassation on 18 November 2020 in case number 18-14.242, a dispute about an American revocable trust whose income beneficiary died in France, reported at ECLI:FR:CCASS:2020:CO00673. The Versailles appeal court had treated the trust as a split of ownership and held that no tax was due when the income beneficiary died. The higher court annulled that reasoning. It held: “le fait générateur des droits de mutation à titre gratuit est constitué par le transfert de propriété, qui, s’agissant de biens placés dans un trust, s’opère par l’effet de la distribution de l’actif du trust au bénéficiaire final, au jour de sa clôture, laquelle peut être postérieure au décès du constituant.” In other words, the taxable event is the transfer of ownership, which for trust assets happens through distribution of the trust fund to the ultimate beneficiary when the trust closes, and that closing can occur after the settlor’s death. The operative part, reported at ECLI:FR:CCASS:2020:CO00673, reads: “CASSE ET ANNULE, en toutes ses dispositions, l’arrêt rendu le 12 janvier 2018, entre les parties, par la cour d’appel de Versailles ;” Three lessons follow for British families. First, keeping the trust running after the settlor’s death postpones but does not cancel the duty; distribution is the trigger. Second, the administration cannot tax a mere expiry of an income interest as if ownership had moved. Third, because closure can be structured, the deed, the ages and contingencies of beneficiaries, and the timing of appointments all have French tax consequences that should be reviewed while the settlor is alive.

British readers should also consider the wider succession picture before concluding that duty is the only issue. Where the trust holds a French house, questions of forced heirship, the surviving spouse’s rights and the choice of applicable law interact with the tax analysis, and families holding through companies face a parallel set of company-law and tax questions. Our analysis of family companies holding French homes, at British SCI, French house, family shares, tax, succession and divorce after Brexit, complements this trust guide for households choosing between the two structures. The present article stays with trusts, but no British family should pick its vehicle without comparing both.

B. How to contest the penalty, the levy and the assessment

Challenges begin with method. French tax disputes move in stages: administrative claim, known as réclamation contentieuse, then court proceedings, and each stage has strict time limits, normally running from the assessment notice or the rejection of the claim. A trustee who receives a penalty notice for breach of Article 1649 AB, a levy assessment under Article 990 J, or a succession-duty assessment under Articles 750 ter and 792-0 bis should therefore do four things at once: diary every deadline on the notice itself, request the full file and calculation, pay or guarantee where needed to stop surcharges running, and file a reasoned claim that preserves every argument. Arguments raised late can be lost for good, while arguments raised early can be refined before the judge.

The strongest substantive lines of defence emerge from the statute and the two rulings. On penalties, verify the breach itself: was the trust within one of the three Article 1649 AB triggers for the year in question, was the trustee the person legally bound to file, and has the administration identified each omission separately rather than duplicating one breach into several fines. On the yearly levy, test the exemptions and the base: irrevocable charitable or pension trusts, assets already in a French wealth-tax base, correct 1 January valuation, and correct identification of the persons liable as settlor or beneficiary rather than the trustee personally. On succession duty, test vesting and timing under the 2020 ruling: has distribution to the ultimate beneficiary actually occurred, or is the administration taxing an income interest that merely expired. Each of these turns on documents, the deed, appointments, valuations, residence evidence, so assembling the paper trail early is as important as choosing the legal argument.

The treaty argument deserves special attention after the second ruling. On 11 February 2026 the commercial chamber of the Cour de cassation decided case number 23-14.305, concerning a Canadian-law trust and the Article 990 J levy for 2012 to 2015, reported at ECLI:FR:CCASS:2026:CO00069. The Paris appeal court had discharged the levy on treaty grounds, treating the trust as treaty-resident in Canada. The higher court annulled, holding that the appeal judges should have asked “si ce prélèvement, institué après la date de la signature de la Convention, constituait un impôt de nature identique ou analogue à ceux qu’elle vise”, and that “la cour d’appel n’a pas donné de base légale à sa décision.” The operative part, reported at ECLI:FR:CCASS:2026:CO00069, reads: “CASSE ET ANNULE, en toutes ses dispositions, l’arrêt rendu le 6 février 2023, entre les parties, par la cour d’appel de Paris ;” For British families the message is twofold. A double tax treaty can in principle shelter trust assets, but only if the specific French charge falls within that treaty’s scope, and charges created after the treaty’s signature must pass the identical-or-analogous test. Invoke the France-United Kingdom treaty expressly, identify the treaty articles covering the income, capital or estate at stake, and prove how the French levy or duty maps onto them; a bare assertion of double taxation will not survive appeal.

Practical compliance going forward is straightforward once the analysis is done. Identify every trigger the trust meets, file the event returns with the deed and identities, file the annual value return on a proper 1 January valuation, reconcile with any French wealth-tax filing so the same assets are treated consistently, and keep English registration and accounts aligned so HM Revenue and Customs and the French administration receive coherent information. Where the past is already non-compliant, a trustee who comes forward voluntarily is in a far stronger negotiating position than one discovered through a notarial filing, a land-registry cross-check or an information request from London. Files of this kind, combining English trust law, French tax procedure and treaty analysis, are handled by practitioners working across both systems; our office discusses such files by telephone at +33 6 46 60 58 22, and each assessment is reviewed against the deed, the valuations and the applicable treaty before any claim is drafted.

Conclusion

An English trust holding a French house is fully visible to French tax law. The trustee must file the creation, the changes and the yearly market value under Article 1649 AB on pain of a 20,000 euro fine per breach. The settlor or the beneficiaries may face the yearly levy under Article 990 J. When the settlor dies, succession duty under Articles 750 ter and 792-0 bis attaches to the trust assets at rates driven by family relationship, and since the 2020 ruling of the Cour de cassation the decisive moment is distribution to the ultimate beneficiary, whenever the trust closes. Treaties can help, but since the February 2026 ruling they must be pleaded charge by charge. Trustees who map their triggers, value correctly, file on time and challenge assessments within the deadlines keep every option open; those who ignore the French return discover, often years later, that silence was the most expensive clause in the deed.