A rare tax treaty still in force between France and the UK

Despite the UK’s exit from the European Union, the France–UK inheritance tax treaty, signed on June 21, 1963 and still in effect today, remains a powerful legal tool for cross-border estate planning. It is one of the very few bilateral agreements that directly addresses succession taxes, and its existence provides a clear framework for families with ties to both jurisdictions.

Unlike general double tax treaties, which typically exclude succession taxes, this specific convention ensures that assets are not doubly taxed in both countries upon death. For British nationals owning property in France or French residents with heirs in the UK, this treaty offers crucial legal and tax protection.

Scope of the treaty : who and what it covers

The treaty applies to individuals who are residents or nationals of either France or the UK. It governs taxes on transfers upon death and applies to both movable and immovable property, including real estate, financial assets, business interests and more.

The convention is particularly relevant for :

• British nationals residing in the UK but owning French real estate ;

• French nationals residing in France with heirs in the UK ;

• International families with mixed UK–French assets or beneficiaries.

It applies to the French droits de mutation à titre gratuit (DMTG) and the UK inheritance tax (IHT). Importantly, it takes precedence over French domestic rules when its provisions apply, providing legal certainty for cross-border estates.

Asset-based allocation of taxing rights

The France–UK inheritance tax treaty is based on the “situs rule”, which allocates taxing rights based on the location and nature of the assets. Here are the core principles:

• Real estate is taxed only in the country where it is located.

• Movable property forming part of a business is taxed in the state where the business is carried out.

• Other movable assets (e.g. bank accounts, securities) are generally taxed in the state where the deceased was resident.

This clear allocation ensures that each asset is taxed only once, in one jurisdiction, eliminating double taxation and reducing administrative burdens for heirs and executors.

Tax credits and coordination mechanisms

Where both countries have the right to tax a particular asset (for example, in the case of certain movable assets or dual residences), the treaty provides for foreign tax credits. This mechanism ensures that the tax paid in one state is credited against the liability in the other, up to the amount of tax due.

This coordination mechanism is critical for high-net-worth individuals who may have complex asset portfolios spanning multiple jurisdictions. It also protects heirs from unexpected and punitive double taxation on inherited wealth.

A strategic opportunity for British families investing in France

For British families with holiday homes, rental properties or business interests in France, the 1963 treaty can be a game-changer. It enables strategic estate planning by:

• Ensuring French real estate is only taxed in France ;

• Allowing British heirs to avoid inheritance tax in the UK on French assets ;

• Facilitating the use of French legal tools such as usufruct, donations-partage and société civile to organize inheritance ;

• Creating certainty and legal security for families navigating cross-border estate transfers.

With proper legal and fiscal structuring, the treaty allows for efficient transmission of assets while preserving family wealth across generations.

No such treaty exists with other jurisdictions

It is worth noting that France has no comparable inheritance tax treaty with the United States, Canada, the UAE or most other countries. This makes the UK convention unique and strategically valuable.

For cross-border families, particularly those based in London or major UK financial centers, this treaty should be seen as a key pillar of tax planning. It can significantly influence decisions on residency, asset location, holding structures and succession vehicles.

Conclusion : leverage this overlooked tax advantage

The France–UK inheritance tax treaty is a rare and powerful tool for international families, yet it remains largely underused and misunderstood. At Qualifisc, we assist British individuals, families and advisors in understanding the full implications of this treaty, structuring their French assets accordingly, and preparing for a smooth and tax-efficient succession.

If you are a UK-based investor or family with assets in France — or if you advise such clients — don’t overlook this treaty. With the right strategy, it can dramatically reduce the tax burden and ensure long-term protection of family wealth.

Contact us for bespoke advice on cross-border inheritance tax planning under the France–UK treaty.