Treaty of 24 November 1978 · 2004 protocol

France-US estates: which country taxes, and on which assets

An American parent who dies in France, a French national who dies in the United States, heirs on both sides of the Atlantic: France and the United States may each claim tax. The 1978 treaty allocates that right according to the deceased's domicile and citizenship and the nature of the assets, with specific rules for the surviving spouse.

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Is an estate between France and the United States taxed twice?

In principle no, thanks to the France-US estate and gift tax treaty of 24 November 1978. Real estate is taxable in the state where it is located (article 5). Shares, receivables, accounts and other intangible assets are taxable only by the state of which the deceased was a citizen or in which he was domiciled (article 8). Where both states tax the same assets, the state of domicile grants a credit for the tax paid in the other (article 12).

The surviving spouse is not exempt automatically. US law reserves the unlimited marital deduction for a spouse who is a US citizen; a non-US spouse does not get it, even if living in the United States. The domestic-law fix is the qualified domestic trust (QDOT). The treaty, as amended in 2004, opens a different route in article 11(3): a capped deduction, by election of the executor. That election replaces the QDOT; it is not added to it.

The treaty does not stop the United States from taxing the estates of its citizens wherever they live. It also grants a pro rata US unified credit for a non-US decedent domiciled in France, and applies French allowances as if the deceased, or the heir, had been domiciled in France.

France-US treaty of 24 November 1978 as amended, articles 1, 5, 8, 11 and 12; French tax code, article 750 ter.

— In brief
Text
Treaty of 24 November 1978, protocol of 8 December 2004
Real estate
Taxable in the state where it is located
Securities and accounts
Taxable by the state of the deceased's citizenship or domicile
Watch point
Non-US spouse: no unlimited deduction; QDOT or article 11(3), never both
— The treaty rules

Who taxes what

  • Domicile of the deceased (article 4). First determined by each state's law; in case of dual domicile, it follows the permanent home, then the centre of vital interests, habitual abode and finally citizenship. A person with a single citizenship who lived in the other state for less than five of the last seven years is deemed domiciled in the state of citizenship, if he clearly intended to keep his domicile there.
  • Real estate (article 5). Taxable in the state where it is located, including shares in companies at least 50% of whose assets consist of real estate located in that state.
  • Securities, receivables, accounts and cash (article 8). Subject to articles 5 to 7, taxable by a state only if the deceased was its citizen or domiciled there, and if its own law taxes them.
  • Tax credit (article 12). Where the deceased was domiciled in France, France taxes the whole estate and deducts the US tax paid on the assets the treaty makes taxable in the United States, capped at the corresponding French tax; US tax due solely by reason of the deceased's US citizenship does not give rise to this credit, the United States then crediting the French tax.
  • Allowances (article 12, paragraph 4). Where the deceased or donor was a US citizen or domiciled in the United States, France grants the same allowances and credits as if they had been domiciled in France. Where the deceased or donor was domiciled in France and the heir is a US citizen or domiciled in the United States, the heir receives the same allowances as if he were domiciled in France.
  • US unified credit (article 12, paragraph 3). For a non-US decedent domiciled in France, US estate tax on US-situs assets benefits from the higher of two credits: that of a non-resident, or a fraction of a US citizen's credit proportional to the share of US assets in the estate, provided the necessary information is supplied and reduced by credits already used on prior gifts.
— The surviving spouse

A non-US spouse has no right to the unlimited deduction

US law reserves the unlimited marital deduction for a surviving spouse who is a US citizen (26 U.S.C. section 2056(a) and (d)(1)). A French spouse, or a spouse of any other nationality, does not get it, even if living in the United States: the estate is taxed at the first death, above the applicable exclusion, on what passes to the spouse. A spouse who becomes a US citizen before the return is filed, having resided in the United States since the death, regains the deduction (section 2056(d)(4)).

First route, the QDOT. The assets pass to a qualified domestic trust (section 2056A), governed by the law of a US state and having at least one US trustee, citizen or corporation, able to withhold the tax on distributions of capital, or the spouse irrevocably assigns them to it before the return is filed; the executor elects QDOT treatment in that return. The deduction is then allowed, but the tax is not removed: it is deferred, then due on distributions of capital and at the spouse's death, with a security arrangement above $2 million of assets: bank trustee, bond or letter of credit (Treas. Reg. 20.2056A-1 and 20.2056A-2).

Second route, article 11(3) of the treaty. The deceased was domiciled in France or the United States, or a US citizen; the surviving spouse was domiciled in one of the two states (with at least one French-national spouse where both were domiciled in the United States); the assets would have qualified for the deduction had the spouse been a US citizen. The executor elects the treaty and irrevocably waives any other marital deduction, within the time allowed for the QDOT election. The deduction equals the lower of the value of the qualifying assets and the applicable exclusion amount at the date of death (basic amount of $15 million for deaths in 2026, to which may be added the exclusion carried over from a predeceased spouse), disregarding the deceased's prior gifts (Rev. Proc. 2025-32). Former citizens and long-term residents whose renunciation of status had avoiding tax as one of its principal purposes are excluded for ten years (article 1(4)).

One or the other, never both. The US regulations say so: the estate may take the Code deduction (QDOT) or the treaty deduction, and may not combine them on the balance of the assets (Treas. Reg. 20.2056A-1(c)). If the value passing exceeds the cap, the treaty route leaves the excess taxable; of the two routes, only the QDOT then covers the whole, at the price of the trust and the deferral. The choice is exercised on the US estate tax return, within the time allowed for the QDOT election, on figures for both options.

For a decedent domiciled in France, article 11(2) also applies to non-community assets passing to a non-US-citizen spouse and taxable in the United States only by reason of their situs (real estate, permanent establishment, tangible movables): they enter the US tax base only if their value, after deductions, exceeds half of the value of all the assets in that base. The rule does not benefit a US citizen domiciled in France or the former citizens mentioned above.

On the French side, assets acquired for value during the marriage by a spouse domiciled in the United States or holding US citizenship, and passing to the other spouse, are treated as community property for French tax purposes, unless another regime was expressly chosen (article 11, paragraph 1). The matrimonial regime and its connecting factor therefore weigh directly on the base taxed in France.

— Before the courts

Four decisions on the spouse, the trust and the strict reading of the treaty

French courts have ruled little on the 1978 treaty; the useful decisions also come from US judges, who apply the text to the estate of a decedent domiciled in France.

  • Non-citizen spouse and late return. The widow, a Bolivian national, was not a US citizen; the executor waited for her naturalisation to claim the marital deduction and filed the return after the extended deadline. The 25% late-filing penalty is upheld, for lack of reasonable cause for part of the delay (Federal Circuit, 10 June 2014, no. 2013-5103, Estate of Liftin, 754 F.3d 975).
  • The treaty deduction is taken with its consequences. For a decedent domiciled in France, article 11, as worded in 1978, gave the marital deduction at the price of the rates applying to US estates; it did not also allow the unified credit reserved for citizens and residents, the treaty not making the citizens' regime applicable as a whole (9th Circuit, 7 February 1990, no. 88-7479, Estate of Arnaud, 895 F.2d 624).
  • A US trust at the settlor's death. The settlor had irrevocably parted with the assets; the beneficiaries acquired them when the trust closed on his death, which is a gratuitous transfer taking effect on the day of death, taxable in France (Cass. com., 15 May 2007, no. 05-18.268).
  • Distributions from a US trust are not income by default. The authorities had taxed as distributed income the sums received from a trust set up to organise the father's succession; the assessments are annulled, as there was no proof that the sums were income rather than capital transfers (CAA Paris, 21 April 2023, no. 20PA02868).
— Filings

What to file, and where

  • In France. The estate return, within the legal deadline, listing US assets where the deceased was domiciled in France; the treaty is invoked there for the tax credit and allowances.
  • In the United States. Depending on the deceased's situation, a federal estate tax return, the non-resident non-citizen version where US assets exceed the statutory threshold. US institutions may require a transfer certificate from the US tax authority before releasing the assets of a non-resident decedent.
  • Coordination. Both returns must use the same domicile, the same estate composition and consistent credits. The firm handles the French side and the treaty, together with the US preparer, who alone signs the federal return.
— What to understand

Two systems that look at different things

France taxes the person who receives, according to his relationship to the deceased: on all assets if the deceased was domiciled in France, and on the assets received by an heir domiciled in France for at least six of the last ten years (article 750 ter of the French tax code). The United States taxes the estate itself, before distribution: on the worldwide assets of its citizens and residents and, for others, only on assets located in the United States, subject to specific rules for certain former citizens.

Without a treaty, the two logics add up. The 1978 treaty orders them: it designates the state that may tax each asset and provides a credit where both do. It still has to be invoked correctly on both sides, on time, with the right forms.

— Typical situations

Four configurations we handle

A French national domiciled in France leaves US assets

A brokerage account, a savings plan or a property in the United States. If the deceased was not a US citizen, France taxes everything; the United States taxes only real estate and certain assets connected with its territory, and the account may remain frozen until the US tax authority issues its certificate.

An American domiciled in France dies

France taxes as the state of domicile, the United States as the state of citizenship. The French tax is credited against the US tax under the treaty.

A decedent domiciled in the United States leaves heirs in France

The French rule on heirs domiciled in France runs into article 8: except for real estate, assets of a business in France and tangible movables located in France, France may tax only if the deceased was a French national.

Gifts between the two countries

The treaty also covers gifts, with the same allocation rules and the same treatment of allowances.

— Diagram

The non-US spouse: two routes, one choice

What US law denies, the QDOT and article 11(3) of the treaty, and why they cannot be combined.

Diagram of the surviving spouse who is not a US citizen: US law denies the unlimited marital deduction, then the executor chooses either the qualified domestic trust (QDOT), which defers the tax, or the capped deduction of article 11(3) of the 1978 treaty with an irrevocable waiver of the QDOT; the two routes cannot be combined.
A surviving spouse who is not a US citizen has no right to the unlimited marital deduction. The executor has two routes: the QDOT, which defers the tax, or the capped deduction of article 11(3), by election and with a waiver of the QDOT. One or the other, never both.
— FAQ

What we are asked about France-US estates

My father, French, not a US citizen and domiciled in France, had a brokerage account in the United States: who taxes?

France, as the state of domicile, on the whole estate, US account included. Under article 8 of the treaty, the United States may not in principle tax ordinary shares and cash, since the deceased was neither a US citizen nor domiciled in the United States; the content of the account still needs checking, as certain real-estate-type holdings follow other rules. In practice, the US institution may ask for a certificate from the US tax authority before transferring the assets.

I inherit from an American parent who lived in the United States, and I live in France: will I pay French tax?

French law in principle taxes an heir domiciled in France for at least six of the last ten years, even if the deceased lived abroad. But the treaty limits this: apart from real estate located in France, France may tax the assets only if the deceased was a French national or domiciled in France. If your parent was only American and domiciled in the United States, the ordinary securities and accounts left to you escape French tax; real estate located in France and certain assets connected with France remain taxable in France.

My American spouse has died and I am French: is the estate taxed in the United States?

Yes: the United States taxes the estates of its citizens on their worldwide assets, above the applicable exclusion ($15 million basic amount for deaths in 2026). As you are not a US citizen, the unlimited marital deduction does not apply. The executor has two routes: the QDOT, which defers the tax, or, if the treaty's domicile conditions are met, the election under article 11(3), which caps the deduction at the applicable exclusion and requires waiving the QDOT. The choice is exercised on the US estate tax return, within the time allowed for the QDOT election.

Can I combine the QDOT and the deduction under the treaty?

No. The US regulations provide that the estate chooses one or the other, and the treaty makes the election conditional on an irrevocable waiver of any other marital deduction, within the time for the QDOT election. The amount passing to the spouse decides the choice: below the cap, the treaty avoids the trust; above it, only the QDOT covers the excess.

Do French allowances apply if the deceased was American?

Yes. If the deceased was a US citizen or domiciled in the United States, France grants the same allowances and credits as if they had been domiciled in France. And where the deceased was domiciled in France, an American heir or one domiciled in the United States receives the same allowances as an heir domiciled in France. Allowances depend on the family relationship, as for any French estate.

A property in France owned by an American domiciled in the United States: who taxes?

France, as the state where the property is located (article 5). The United States taxes it too, as the state of citizenship, and grants a credit for the French tax on that property, capped at the corresponding US tax.

Does the income tax treaty apply to estates?

No: it has its own text, the treaty of 31 August 1994, covered on our page on the France-US tax treaty.

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Confidential first conversation. The firm handles the French side and the application of the treaty, together with the notary and the US adviser.

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© BENSAID Avocats. The information on this site does not constitute legal advice. Sources: France-US estate and gift tax treaty of 24 November 1978, consolidated by the protocol of 8 December 2004, published on impots.gouv.fr; French tax code, article 750 ter; 26 U.S.C. sections 2056 and 2056A; Treas. Reg. 20.2056A-1 and 20.2056A-2; Rev. Proc. 2025-32.