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Trusts – the French connection

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Did you know that if a trust has a French connection, the trustees may have a requirement to file an annual report with the French authorities, even if the trust is UK-resident trust?

Under French law, trusts cannot be created, but their legislation does recognise non-French trusts where they have been created either in lifetime or on death and are one of the following:

  • Discretionary Trust
  • Interest in Possession Trust
  • Accumulation and Maintenance (A&M) Trust
  • Bare Trust
  • Charitable Trust
  • Pension Trust
  • Any other legal structure that has the quality of a trust; i.e. a settlor placing assets or rights under the control of a trustee for one or more beneficiaries.

The above trusts may need to file an annual report with the French authorities, if one of the four following conditions apply:

  • Any one of the following are French tax residents as at 1 January of the reporting tax year: settlor, beneficiaries (including those with a discretionary interest), a specific class known as “beneficiaries deemed settlors” (BDS).
  • As of 1 January of the reporting year, assets or rights are held in France, including non-French entities owning French real estate and rights in France.
  • Where the trustee is a French tax resident at 1 January of the reporting year.
  • From 14 February 2020, a trustee established (e.g. corporate trustees) or residing outside of the EU, acquires French real estate, rights or enters into a business relationship in France (this might include engaging with advisors in France).

If a trust fits the definition above and is caught by one of the conditions, we recommend that you seek tax advice from someone qualified to provide it. We work closely with the international Kreston Global network and would be happy to recommend an advisor if required.

Get in touch with our Private Client team on 0333 123 7171.