Brussels treaty of 20 January 1959 · inheritance

France-Belgium estates: the deceased's domicile and the 1959 treaty

Between France and Belgium, a dedicated inheritance treaty allocates the right to tax each asset according to its nature and the deceased's domicile. It protects bank accounts, securities and receivables, which are reserved to the State of domicile. Its allocation rules do not apply to lifetime gifts, which leaves a risk of double taxation that planning must address.

Prepare an estate France-Belgium tax treaty
Paris · Geneva · Marseille · Cannes · Lisbon

How is an estate taxed between France and Belgium?

The treaty signed in Brussels on 20 January 1959, in force since 12 June 1960 (decree no. 60-876 of 12 August 1960), applies to the estate of a person domiciled in France or Belgium at death. Real estate is taxable in the State where it is situated, businesses (fonds de commerce) in the State where they are registered in the trade register, and tangible movables where they are located at death (Articles 4 to 7). All other assets, notably bank accounts, securities and receivables, are taxable only in the State of the deceased's domicile (Article 8).

The State of domicile may also tax, under its domestic law, assets situated in the other State; it then credits the tax paid in that other State on those assets, to the extent its own tax applies to them (Article 10). Lifetime gifts fall outside these rules.

France-Belgium treaty of 20 January 1959 on inheritance taxes and registration duties, Articles 1, 4 to 8 and 10, text published on impots.gouv.fr.

— In brief
Text
Treaty of 20 January 1959, applicable to estates opened since 12 June 1960
Taxes covered
French inheritance tax; Belgian succession duty and transfer duty on death
Method
Allocation by type of asset, effective rate and credit in the State of domicile
Watch point
Gifts outside the allocation rules; claim within one year of paying the second tax
— Which State taxes which asset

The allocation under Articles 4 to 8

  • Domicile (Article 3). Domicile is the place of the permanent home, understood as the centre of vital interests, that is, the place with which personal relations were closest. Failing that, the principal stay; where stays were of equal length, nationality; for a dual national or a national of neither State, the two administrations reach agreement.
  • Real estate and real property rights (Article 4). Taxable in the State where the property is situated. Whether an asset is immovable is determined by the law of that State; receivables secured by a mortgage or lien are not real property rights. Company shares are not covered: the administration lists shares in French companies among the assets of Article 8 (BOI-INT-CVB-BEL-20, no. 140), so shares in a French SCI held by a deceased domiciled in Belgium within the meaning of the treaty are not taxable as such in France, even though domestic law treats them as French securities; their value may only be taken into account for the effective rate. An atypical structure (right of enjoyment, split ownership, foreign company) calls for a review of its articles.
  • Businesses (Article 5). Taxable in the State of registration in the trade register, together with the lease, equipment and stock. Trade receivables, deposits and securities attached to the business remain taxable in the State of domicile (BOI-INT-CVB-BEL-20, no. 110).
  • Ships, boats and aircraft (Article 6). Taxable in the State of registration.
  • Tangible movables (Article 7). Taxable where they are actually located at death, including banknotes and cash. The administration accepts that bearer securities are not tangible movables.
  • All other assets (Article 8). Bank accounts, securities, company shares, receivables, intellectual property rights: they are taxable only in the State of the deceased's domicile. The administration infers that French securities in the estate of a person domiciled in Belgium cease to be taxable in France, except for the purpose of the effective rate (BOI-INT-CVB-BEL-20, no. 140).
— Liabilities, rate and tax credit

Three mechanisms to combine in the return

Liabilities (Article 9). Debts secured on real estate, a business or a movable are deducted from that asset; other debts are deducted from the assets taxable in the State of domicile. Any uncovered balance is carried over to the other assets taxable in the same State, then to those of the other State.

Effective rate (Article 10 a). Each State may compute the tax on the assets reserved to it at the average rate that would apply if it took into account all the assets its law would allow it to tax. Exempting an asset does not mean ignoring it.

Credit in the State of domicile (Article 10 b). The State of domicile may also tax real estate, businesses, ships and movables situated in the other State, and then credits against its own tax, to the extent that tax applies to those assets, the tax levied in the other State on the same assets. For a deceased domiciled in France owning a property in Brussels, Belgian duties are credited against the French duties relating to that property.

Equal treatment (Article 12). Nationals of one State taxable in the other benefit, under the same conditions as its nationals, from the exemptions, allowances and reductions linked to family circumstances.

Claim period (Article 17). Where double taxation contrary to the treaty arises, a claim to the competent authority must be filed within the year following payment of the second tax. This very short period must be anticipated as soon as the returns are filed.

— Gifts: outside the scope of the treaty

Gifts remain under each State's ordinary law

  • Lifetime gifts fall outside the allocation rules. Articles 4 to 10 address estates only; as the administration points out, gifts remain subject to the ordinary law of each State (BOI-INT-CVB-BEL-20, no. 40). A gift from a parent domiciled in Belgium to a child living in France may therefore fall under both laws.
  • The French domestic remedy, and its limits. Article 784 A of the French Tax Code allows tax paid outside France on assets situated outside France to be credited against French duties, but only where France taxes by reference to the donor's domicile in France (Article 750 ter, 1°) or the donee's domicile in France (Article 750 ter, 3°), the latter requiring domicile in France for at least six of the previous ten years. The credit is limited to the French tax relating to assets situated outside France, with no refund of any excess, and requires foreign duties actually paid. It does not apply where France taxes only French assets: every cross-border gift must be prepared in advance.
  • One exception: certain legal persons. Only Article 13 expressly extends to gifts: the exemptions and reductions granted to the State, local authorities and certain legal persons benefit legal persons of the same nature in the other State.
  • Three regions, three scales. In Belgium, inheritance and gift duties are a regional matter (Flanders, Wallonia, Brussels-Capital): the last domicile within Belgium matters as much as the country.
— What to understand

The deceased's domicile decides almost everything

The 1959 treaty allocates to the State of the deceased's domicile everything that is not real estate, a business, a ship or a tangible movable. For a financial estate, the question of domicile is therefore decisive, and it is settled under the treaty's criteria: centre of vital interests, then principal stay, then nationality.

This old text has not been replaced by the treaty signed in 2021, which covers only taxes on income and wealth. It remains the reference tool for families settled on both sides of the border, provided its blind spots are known: lifetime gifts, and a claim period of only one year.

— Who is concerned

Four common situations

French nationals domiciled in Belgium

Their accounts and portfolios, even if held in France, fall to Belgium; their French real estate remains taxable in France.

Belgian owners of French property

A second home or rental property held directly in France triggers French inheritance tax on that asset.

Heirs living in the other country

French domestic law may tax by reference to the heir's domicile; the treaty limits that taxation for the assets it reserves to the deceased's State.

Business owners on both sides of the border

Businesses, company shares and trade receivables do not follow the same rule.

— Frequently asked questions

What we are asked about France-Belgium estates

My parent domiciled in Belgium owned a flat in Paris: does France tax the estate?

Yes, as regards the flat: real estate is taxable in the State where it is situated (Article 4). Belgium, the State of domicile, may also include it in its own taxation, but it then credits the French duties relating to that flat, up to its own tax on that asset.

Are accounts and a securities portfolio held in France by a deceased domiciled in Belgium taxed in France?

No. They fall under Article 8 and are taxable only in Belgium, the State of domicile. France may only take them into account to set the rate applying to the assets it does tax, such as French real estate.

My parent domiciled in Belgium held shares in an SCI owning a house in France: does France tax those shares?

In principle no. The 1959 treaty does not class company shares as real estate: the administration places them among the assets of Article 8, taxable only in the State of the deceased's domicile (BOI-INT-CVB-BEL-20, no. 140). Under domestic law these shares are French securities, but the treaty rules out their French taxation; their value may only be taken into account to set the rate applying to the assets France does tax. Holding the house directly would have led to the opposite result: the property would have been taxable in France.

I inherit in France from a parent domiciled in Belgium: am I taxed in France because I live there?

French domestic law in principle taxes assets received by an heir domiciled in France for at least six of the last ten years. But the treaty reserves the Article 8 assets to the State of the deceased's domicile: for those assets, France cannot exercise that taxation. French real estate remains taxable in France.

Does the treaty apply to gifts?

Not its allocation rules, which concern estates only; only the Article 13 clause on exemptions granted to certain legal persons extends to gifts. A cross-border gift can therefore be taxed in both States. French domestic law provides for a credit for foreign tax on assets situated outside France (Article 784 A of the French Tax Code), subject to domicile conditions, and the structure of the transaction should be studied before signing.

How is the domicile of a deceased who split their time between the two countries determined?

Under Article 3: the centre of vital interests, that is, the place of closest personal relations; failing that, the principal stay; where stays were equal, nationality. The evidence to gather is what establishes family and social life: home, spouse, children, doctors, community commitments.

Does the new 2021 tax treaty change inheritance?

No. It covers only taxes on income and wealth; at the update date, the treaty signed on 9 November 2021 has not entered into force and the 1964 treaty remains applicable. Estates remain governed by the 1959 treaty. We set out the status of the treaties on our page France-Belgium tax treaty.

Cité par

An estate between France and Belgium to organise?

Confidential first conversation. The firm reviews the French side and the application of the 1959 treaty, working with the Belgian or French notary.

Request a first conversation France-Belgium tax treaty

© BENSAID Avocats. The information on this site does not constitute legal advice. Source: France-Belgium treaty of 20 January 1959 on inheritance taxes and registration duties, published on impots.gouv.fr; BOI-INT-CVB-BEL-20.