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Published on Friday 07/09/2018

The fraudulent concealment of assets in trusts, brought out into the open by the dispute between the widow of Daniel Wildenstein and her two stepsons in connection with the settlement in France of the estate of the well-known deceased art dealer, led French lawmakers to institute a tax framework in France for assets placed in trusts set up abroad.

Case law concerning trusts, which were hitherto not recognized by French law, fully accepted their provisions in France without ever considering them as contrary to French international public policy, unless their effects infringed the reserved share under public policy in domestic law if they concerned real estate assets located in France covered by the French law of succession. 


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Published on Wednesday 14/06/2017

A legal document drafted in one State cannot be effective in another State unless the legalisation formality is completed. It shall be noted that regarding court decisions, an enforcement formality will in principle be necessary for a judgement rendered abroad to be enforceable in another country.


We will successively examine the general regime of legalisation, and then its simplified version (Apostille) (I), exemptions (II) and the effects of the absence of legalisation (III).



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See also our product information sheet on the powers of attorney issued in France for use abroad.


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Tags : International law Personal wealth Contract Sale

Published on Wednesday 02/11/2016

French decree no. 2016-567 of 10 May 2016 created, via Article 1649 AB of the French Tax Code, a "public register of trusts", with the aim of achieving transparency and combating tax fraud and evasion (particularly by preventing use of dummy corporations). The conditions for implementing the register were stipulated by an order of 21 June 2016. An interim order of the Council of State and a recent decision by the Constitutional Council have put an end to this system before it became fully operational.


The legislation sought to compile a register of trusts when one of the elements of the common law mechanism was in France, i.e.:

- the parties if at least one of them (trustee, settlor or beneficiary) had tax residency in France;

- the object of the trust if it included an asset or right located in France.


The public register of trusts was supposed to contain the following information:

- name and address of the trust;

- date of establishment and end date of the trust;

- date and nature of the trust declaration mentioned in Article 1649 AB of the French Tax Code;

- and information identifying the three parties to the trust (settlor, beneficiary and trustee).  


The register was supposed to go online on 5 July 2016. By an order of 22 July, the Council of State suspended implementation of the decree (and thus the creation of the register), based on the risks of infringing the privacy of the applicant given that the register could allow public access to personal data (such as testamentary intentions).


The Constitutional Council to which a QPC (question on the conformity of a law with the Constitution) had been submitted at the same time, handed down a decision on 21 October 2016, considering that the public register of trusts as planned by the legislative provisions was unconstitutional. Although the register pursues the constitutional objective of fighting tax fraud and evasion, the lack of limitation on the group of people who would have access to it "restricts [the right to privacy] in a way that is manifestly disproportionate to the objective pursued". As a result, the decree was immediately repealed.


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Tags : Trust Taxation

Published on Wednesday 12/10/2016

In a ruling of 19 May 2016 (no. 14VE01214), the Administrative Court of Appeal of Versailles judged that a trust incorporated under British law could be likened to a French public-interest foundation, thereby exempting it from withholding tax on distributed dividends of French origin in respect of income declared for tax years 2010 and 2011.

A British charity trust was in a dispute with the tax authorities in connection with the trust's characterization in French law. The tax authorities disputed the trust's totally altruistic activity, more particularly with respect to the number of paid directors and the amount of their compensation package.

It was therefore a matter of deciding whether for tax purposes the trust in question should be likened to:

- a non-profit-making organization liable for 15% French corporation tax on dividends received, pursuant to article 119 bis, 2 of the general tax code and article 187, 2nd subsection of the 1st indent of the same code (in the version in force from 1st January 2010);

- or a French public-interest foundation exempted from corporation tax in pursuance of article 206, 5 of the general tax code.

In its ruling the administrative court of appeal firstly accepts the altruistic nature of the trust's management, comparing it to a French non-profit-making organization. It justifies its decision by applying prior legal precedents of the Council of State for the period pre-dating 1st January 2010 (Council of State rulings of 22 May 2015, nos. 369819 and 369820), which considered that the specific activity of the trust and the difficult duties of its directors warranted a higher threshold for receiving their remuneration, which in the end did not seem excessive. However, this characterization did not completely exempt the trust from taxation. Secondly, the appeal court then attempts to liken the trust to a French state-approved foundation. To that end, it again bases its arguments on the aforementioned legal precedents, noting its position with regard to the law of its state of residence (British law) to ascertain whether it met the conditions of domestic law for being characterized as a state-approved organization, namely: the irrevocability of allocation of properties, their vesting in the event of dissolution, accounting obligations and financial accountability and the power of the British supervisory authority (article 18 of the law of 23 July 1987).

After making a comparison in the particular case, in the light of these four criteria, the court of appeal confirms that in this instance the trust can be likened to a French state-approved foundation due to the similarities between the criteria of domestic law and those of British law.


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Tags : International tax law Trust

Published on Friday 03/06/2016

Decree no. 2016-567 of 10 May 2016 is designed to promote transparency, and through Article 1649 AB of the General Tax Code, establishes a "public register of trusts".


The objective pursued by the text is the registration of trusts insofar as one of the components of the common law mechanism is in France:

- if it concerns parties, it is the tax domicile in France that will be taken into account;

- if it concerns the purpose of the trust, it is the lex situs (location) that will establish a connection with France.



The information contained in the public register of trusts will be as follows:

- name and address of the trust;

- date of establishment and termination of the trust;

- date and nature of trust registration as indicated in Article 1649 AB of the General Tax Code;

- and the identity of the three parties to the trust (establishment, beneficiary and administrator or trustee).  



The register will be available on the internet from 30 June 2016 and will identify beneficiaries and companies comprising the trusts. This should put an end to the use of shell companies for the purposes of tax evasion. 


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The interdisciplinary expertise of the Selarl Bruno Bedaride, notaire in Paris covers the following areas: corporate law, international contracts law, legal and tax advice, advice for international transmission, real estate law, family office, real estate and company finance law. We offer more particularly our services to non residents or foreign company who wish to invest, move or create a business in France.