Inheritance tax between siblings: the little-known route to a full exemption in France

French inheritance tax exemption is a topic that often causes confusion among siblings who stand to inherit property or assets in France. While the standard inheritance tax rates between siblings can be substantial, there exists a lesser-known pathway to complete exemption that many people overlook. French tax law provides a specific mechanism that allows brothers and sisters to potentially avoid paying any inheritance tax under certain conditions. This provision could save inheriting siblings tens or even hundreds of thousands of euros, yet remains surprisingly underutilized due to lack of awareness among both French residents and foreign property owners with assets in France.

Understanding the Standard Inheritance Tax Burden for Siblings in France

The default inheritance tax situation for siblings in France is notably less favorable than for direct descendants. While children benefit from a €100,000 allowance and relatively moderate progressive rates, siblings face a much steeper tax burden. Brothers and sisters only receive a €15,932 tax-free allowance, after which they must pay 35% tax on amounts up to €24,430 and a substantial 45% on anything above that threshold. This means siblings inheriting significant assets could lose nearly half the value to taxation, creating a major financial impact that many families struggle to manage when planning their estates.

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The Sibling Cohabitation Exemption: Requirements and Conditions

The key to unlocking full inheritance tax exemption between siblings lies in what’s known as the sibling cohabitation provision. To qualify, siblings must have shared the same residence for at least five years immediately preceding the death of one sibling. This cohabitation must be due to specific circumstances – either both siblings must be single, widowed, divorced, or separated, or they must both be over 50 years of age or have disabilities that prevent them from working. The cohabitation must be genuine and continuous, with both siblings using the property as their primary residence throughout the qualifying period.

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Documentation and Proof Required for the French Tax Exemption

Successfully claiming this exemption requires substantial documentation to satisfy French tax authorities. The surviving sibling must provide concrete evidence of the shared living arrangement, which typically includes:

• Utility bills showing both names at the same address
• Tax returns listing the same residential address
• Witness statements from neighbors or community members
• Medical documentation if claiming disability exemptions
• Rental agreements or property ownership documents
• Bank statements showing shared household expenses
• Official residence certificates from local authorities

Comparative Tax Rates for Different Family Relations in France

Understanding how siblings fit into the broader inheritance tax landscape in France helps illustrate why this exemption is so valuable. The French inheritance tax system applies vastly different rates depending on the relationship between the deceased and the heir. Below is a comparison of the various tax treatments:

The stark contrast between the standard sibling tax rate of 45% and the potential for complete exemption highlights why this provision deserves more attention in estate planning conversations. For siblings who might qualify, the financial implications are substantial, potentially preserving entire inheritances that would otherwise be significantly diminished through taxation.

Planning ahead is essential for siblings who wish to take advantage of this exemption. The five-year cohabitation requirement means that arrangements must be made well in advance of any anticipated inheritance. Additionally, siblings should consult with French tax specialists to ensure their living arrangement meets all the necessary criteria and to prepare the appropriate documentation. While this exemption represents a valuable opportunity, its specific requirements mean it won’t be suitable for all sibling relationships, making professional advice particularly important.

FAQs

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Q: What is the standard sibling inheritance tax rate in France?
A: 35-45%

Q: How long must siblings live together for exemption?
A: Five years

Q: Can part-time cohabitation qualify?
A: No

Q: Is this exemption available to non-French citizens?
A: Yes

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Q: Can married siblings qualify?
A: No