Wealth & Succession practice, Dismemberment of ownership

The quasi-usufruct: restitution claim and Article 774 bis of the French Tax Code

Q: What is the restitution claim?

The restitution claim is the right of the bare owner to obtain, upon the extinction of the quasi-usufruct, the restitution of a value equivalent to that of the assets consumed by the usufructuary. When the usufructuary dies, this claim constitutes a debt of the estate. In principle, it is deductible from the taxable estate, which reduces the base for inheritance transfer duties, subject to the restrictions laid down by Article 774 bis of the French Tax Code.

Q: Is a gift of a sum of money with a reserved quasi-usufruct still worthwhile?

It retains an interest in terms of enjoyment, as the donor keeps the use of the funds, and of transfer of the bare ownership. However, since Article 774 bis of the French Tax Code, the restitution claim arising from such a gift of a sum of money is no longer deductible from the donor's estate, which neutralises the inheritance tax advantage formerly sought. The choice between this configuration and other structures (gift in full ownership, gift of securities, controlled reinvestment) must be assessed case by case, within an overall estate planning strategy.

Q: How can a quasi-usufruct agreement be secured?

The quasi-usufruct agreement must be drawn up in writing and precisely organise the base, the term, the restitution arrangements and, where appropriate, the security granted to the bare owner. To be enforceable against the tax authorities and to allow the deduction of the debt where permitted, it must acquire a certified date, through a notarial deed or registration. Article 773, 2° of the French Tax Code makes the deductibility of debts granted by the deceased in favour of his or her heirs conditional upon rigorous proof by authentic instrument or by private deed bearing a certified date prior to the opening of the estate.

Q: Why is the certified date of the agreement essential?

The certified date establishes beyond dispute the existence and the anteriority of the restitution claim. Without it, the tax authorities may challenge the reality of the debt and refuse its deduction, or even treat it as a disguised gift. Article 773, 2° of the French Tax Code requires, for debts granted by the deceased to his or her heirs, proof by authentic instrument or by private deed having acquired a certified date before the opening of the estate. Documenting the quasi-usufruct and conferring a certified date upon it is therefore a condition of its recognition for tax purposes.

A quasi-usufruct allows the usufructuary to dispose of a consumable asset, most often a sum of money, subject to the obligation to return, at the end of the usufruct, property of the same quantity and quality or its value assessed at the date of restitution (Article 587 of the French Civil Code). This restitution gives rise to a claim in favour of the bare owner, which is in principle deductible from the taxable estate. Since the Finance Act for 2024, however, Article 774 bis of the French Tax Code disallows this deduction where the restitution debt relates to a sum of money over which the deceased had reserved the usufruct, subject to exceptions. The firm secures the quasi-usufruct agreement, its certified date and its enforceability, and aligns the structure with the new tax rules.

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What does Article 587 of the French Civil Code provide?

Where a usufruct includes things that cannot be used without being consumed, such as money, the usufructuary may use them but must return, at the end of the usufruct, either things of the same quantity and quality or their value assessed at the date of restitution (free translation of the text).

This is the quasi-usufruct: the usufructuary becomes owner of the funds and the bare owner holds a restitution claim, payable when the usufruct ends, most often on the usufructuary's death. For estates opened since 29 December 2023, that debt is no longer deductible where it relates to a sum of money over which the deceased had reserved the usufruct (French Tax Code, Article 774 bis), subject to exceptions.

French Civil Code, art. 587 (Légifrance); French Tax Code, art. 774 bis; BOI-ENR-DMTG-10-40-20-20 (BOFiP). Checked on 6 October 2026.

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The quasi-usufruct: mechanism and restitution claim

A quasi-usufruct is a usufruct over consumable assets, that is, assets which cannot be used without being consumed, first and foremost sums of money. Article 587 of the French Civil Code then allows the usufructuary to dispose of them freely, subject to the obligation to return, at the end of the usufruct, either property of the same quantity and quality, or its value assessed at the date of restitution. The usufructuary thus becomes the owner of the funds, but the debtor of a restitution obligation.

This obligation takes the form of a restitution claim in favour of the bare owner. Where the usufructuary is also the deceased, this claim encumbers the estate: on death, it constitutes a debt owed by the deceased to the bare owner. In principle, such a debt is deductible from the taxable estate, thereby reducing the base for inheritance transfer duties. It is precisely this deduction that the legislature intended to restrict.

The quasi-usufruct arises in many wealth-planning configurations: the surviving spouse's usufruct over cash, a gift of a sum of money with a reserved quasi-usufruct, or the transfer of the usufruct onto the sale price of a dismembered asset (subrogation). Each of these situations calls for a detailed analysis of the dismemberment of ownership and rigorous documentation. The firm deliberately takes on a limited number of engagements to ensure the direct involvement of its partners in every matter.

Legal basis, French Civil Code art. 587 (quasi-usufruct)
Restitution claim in favour of the bare owner
Deductibility restricted, French Tax Code art. 774 bis (Finance Act 2024)
Evidentiary requirements, French Tax Code art. 773, 2°
Quasi-usufruct agreement in writing & registered
Certified date & enforceability against the tax authorities

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Article 774 bis of the French Tax Code: scope, exceptions and computation of duties

Introduced by Article 26 of Law no. 2023-1322 of 29 December 2023 (Finance Act for 2024), Article 774 bis applies to estates opened on or after 29 December 2023. Paragraph I provides that restitution debts that are payable and relate to a sum of money over which the deceased had reserved the usufruct are not deductible from the estate. According to the tax authorities, the circumstances in which the reserved usufruct arose make no difference (BOI-ENR-DMTG-10-40-20-20, para. 210).

Debts covered. The gift of the bare ownership of a sum of money with a reserved usufruct, and also the sale of an asset over which the deceased had reserved the usufruct, or any comparable transaction (repayment of a claim, redemption of a capitalisation contract), with the usufruct carried over onto the price or proceeds (para. 210).
Carry-over onto another asset. Where usufruct and bare ownership are carried over by subrogation onto an asset other than a sum of money (securities, capitalisation contract, shareholder current account), there is no restitution debt over a sum of money within the meaning of the text (para. 210).
Sale-price exception. Restitution debts incurred over the sale price of an asset over which the deceased had reserved the usufruct remain deductible if it is shown that they were not incurred for a principally tax-driven purpose, a notion wider than the exclusively tax-driven purpose of the abuse-of-law rule. The authorities weigh a body of indications: time elapsed between dismemberment and sale, the estate-planning reasons for the sale, and the usufructuary's latitude in carrying the usufruct over (paras. 230 to 260).
Spouse's usufruct. The text excludes usufructs arising under Article 757 (surviving spouse's statutory option for usufruct) or Article 1094-1 (gift between spouses or testamentary provision) of the Civil Code; the authorities add usufructs arising from a matrimonial advantage or preciput (para. 270).
In principle outside the scope according to the authorities. Sums resulting from a transaction the deceased did not initiate (expropriation or insurance compensation, distribution of reserves), provided the transaction was not principally tax-motivated, and a usufruct the deceased did not reserve for himself or herself: beneficiary in usufruct of a life insurance contract, legatee of a PACS partner or cohabitant (paras. 270 and 275).
Computation. By derogation from Article 1133, the value of the non-deductible debt is charged to inheritance duties payable by the bare owner, according to his or her family relationship with the usufructuary (at death or at creation of the usufruct, if the duties are lower); the add-back of prior gifts (Article 784) does not apply to these sums, and duties paid when the usufruct was created are credited, with no refund of any excess (paragraph II of Article 774 bis; paras. 280 to 340).

Separately from Article 774 bis, Article 773, 2°, presumes fictitious any debt granted by the deceased in favour of heirs, unless evidenced by a notarial deed or a private deed with a certified date before death. According to a judgment of the Commercial Chamber of the Court of Cassation of 4 December 1984, cited by the tax authorities, this presumption does not reach a debt arising from a quasi-usufruct that derives from the law (BOI-ENR-DMTG-10-40-20-20, para. 60); it remains a risk for contractual quasi-usufructs, hence the importance of a certified date.

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Annotated outline of a quasi-usufruct agreement

The clauses below form the framework of a quasi-usufruct agreement as the firm drafts it. This is an annotated model meant to let you check an existing agreement or prepare a meeting: it is not a ready-to-sign deed, and each clause must be adapted to the origin of the usufruct, the assets and the family situation.

1. Parties and origin of the usufruct. Identity of the usufructuary and each bare owner; constituting instrument (deed of gift with reserved usufruct, succession, will, agreement carrying the usufruct over onto a sale price, Civil Code Article 621). Comment: the origin governs the tax treatment on death (reserved usufruct, spouse's usufruct, received usufruct).
2. Assets and value. Precise description of the sums (amount, account, date of payment) or assets handed over, with their value on the date of the agreement and supporting documents (bank statements, deed of sale). Comment: for assets that are not consumed by first use, such as securities, the power to dispose of them must be expressly stipulated; the quasi-usufruct is then conventional.
3. Power to dispose. The usufructuary may consume, invest or sell the assets, in line with Article 587. Comment: assets acquired with the funds belong to the usufructuary in full ownership; the bare owner holds only a claim.
4. Restitution claim and indexation. Amount of the claim, in principle equal to the sum received; without indexation it stays nominal. An indexation clause is valid only if the index is directly related to the purpose of the agreement or to the activity of one of the parties; indexation on the general price level is prohibited (Article L. 112-2 of the Monetary and Financial Code). Comment: restitution in value, which Article 587 provides for things other than money, calls for precise valuation criteria.
5. Inventory, security or waiver. Statement of the assets handed over, drawn up in the presence of the parties (Article 600); surety, pledge or other security for the bare owner, or express waiver (Article 601). Comment: a donor or seller who reserved the usufruct is not bound to give security; conventional security protects the bare owner against the usufructuary's insolvency.
6. Application and reinvestment. Clause applying the funds to specified assets, or a reinvestment clause in a dismembered asset. Comment: if the funds are reinvested in an asset that is itself dismembered (securities, capitalisation contract), there is no longer a quasi-usufruct over a sum of money and Article 774 bis does not apply (BOI-ENR-DMTG-10-40-20-20, para. 210); the usufruct and bare-ownership rights must actually be carried over onto the new asset, and a later redemption or liquidation carried over onto cash reopens the question. This is often the first arbitrage to make.
7. Information of the bare owner. Periodic statement of the assets or investments. Comment: it prepares the evidence of the absence of a principally tax-driven purpose and the settlement of the estate.
8. Maturity. The claim falls due when the usufruct ends: death of the usufructuary, agreed term, renunciation. The bare owner's death passes the claim to his or her own heirs. Comment: provide for payment terms and set-off against the bare owner's inheritance rights where he or she is also an heir.
9. Fate of the claim on death. Reminder of the deduction regime: debt deductible in principle (Article 768), not deductible if it relates to a sum of money over which the deceased had reserved the usufruct (Article 774 bis), subject to exceptions. Comment: for a sale price, the agreement sets out the estate-planning reasons for carrying the usufruct over; it is the central supporting document.
10. Certified date. Registration of the agreement with the registration office, or a notarial deed. Comment: a private deed acquires a certified date against third parties only through registration, the death of a signatory or its recording in a notarial deed (Civil Code Article 1377); only a certified date prior to death, other than by that death, allows the debt to be proved (Tax Code Article 773, 2°).

In a donation-partage, a reserved usufruct over a sum of money removes the valuation at the date of the deed for computing the reserved share (Civil Code Article 1078): this point is settled at the drafting stage. Where the beneficiary clause of a life insurance contract is dismembered, the spouse's quasi-usufruct falls under a neighbouring regime, set out on our page on the life insurance beneficiary clause.

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A worked example: the price of dismembered securities placed in quasi-usufruct

Assumptions. In 2010, a 64-year-old parent gives two children the bare ownership of a EUR 2,000,000 securities portfolio, reserving the usufruct. In 2022, by common agreement, the securities are sold for EUR 3,000,000 and the usufruct is carried over onto the price (Civil Code Article 621) by a registered quasi-usufruct agreement: the parent has the funds and owes EUR 3,000,000 to the children. The parent dies in 2027, leaving gross assets of EUR 5,000,000 and two children as heirs. The 2010 gift is more than fifteen years old: it is not added back and the EUR 100,000 allowance is intact. Amounts rounded to the euro.

Per child	Deductible debt (estate opened before 29/12/2023, or justified exception)	Non-deductible debt (Article 774 bis, exception not justified)
Gross assets / restitution claim	EUR 5,000,000 / 3,000,000	EUR 5,000,000 / 3,000,000
Taxable share of each child	EUR 1,000,000	EUR 2,500,000
After EUR 100,000 allowance (Article 779)	EUR 900,000	EUR 2,400,000
Duties at the direct-line scale (Article 777)	EUR 212,962	EUR 842,394
Duties for the two children	EUR 425,924	EUR 1,684,788

The difference is EUR 1,258,864, before crediting, in the second column, the duties paid in 2010 on the gift of the bare ownership, with no refund of any excess. Here the debt relates to the sale price of an asset over which the deceased had reserved the usufruct: it remains deductible if the children show that the carry-over was not decided for a principally tax-driven purpose. Twelve years between dismemberment and sale, documented estate-planning reasons and the bare owners' express agreement are indications the authorities accept (BOI-ENR-DMTG-10-40-20-20, para. 250). No period is a safe harbour, and registering the agreement does not by itself prove the absence of a principally tax-driven purpose: the second column remains the scenario to adopt if that proof is not made.

Two variants change the answer. Had the parent given in 2010 the bare ownership of a sum of money, the debt would never be deductible: only the second column would apply. Had the price been reinvested in 2022 in dismembered securities or a capitalisation contract, there would be no restitution debt over a sum of money and Article 774 bis would not apply. For a family business, dismemberment of securities interacts with the Dutreil pact (French-language page), which requires the usufructuary's voting rights to be limited.

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Before the courts: what the Court of Cassation has held on the restitution claim

Four judgments of the Court of Cassation shape the subject. All pre-date Article 774 bis: they remain relevant to prove the existence and origin of the debt and for situations the text leaves outside its scope, but not for the deductibility of a sum of money over which the deceased had reserved the usufruct.

Court of Cassation, First Civil Chamber, 4 November 2020, no. 19-14.421 (published). Where a usufruct covers sums of money, the usufructuary may use them but must return, at the end of the usufruct, sums of the same quantity or their value at the date of restitution (Article 587); the usufruct ending on death, the obligation to return falls on the usufructuary's estate. Légifrance (in French).
Court of Cassation, Commercial Chamber, 27 May 2015, no. 14-16.246 (published). Bare owners of company shares had agreed that the usufructuary would receive dividends drawn from reserves: the resulting restitution debt, payable when the usufruct ends, derives from the law and not from an agreement; it is deductible from the usufructuary's estate, and the presumption of fictitiousness under Article 773, 2°, cannot be raised against it. The authorities now place distributions of dividends drawn from reserves outside Article 774 bis (BOI-ENR-DMTG-10-40-20-20, para. 270). Légifrance (in French).
Court of Cassation, Commercial Chamber, 15 December 2021, no. 19-10.554 (appeal dismissed). Heirs must prove, as at the date of death, the existence of the quasi-usufruct debt they deduct: documents taken in isolation (wealth-evolution tables, bank statements) do not suffice to show that the deceased freely disposed of the funds subject to restitution. This is the case for a written, dated agreement. Légifrance (in French).
Court of Cassation, Commercial Chamber, 11 October 2023, no. 21-12.732 (quashed without remand, unpublished). The bare owner's restitution claim against the usufructuary's estate is deductible from the estate, which avoids double taxation of the same sums. Légifrance (in French).

For an estate opened since 29 December 2023, the outcome of these judgments must be read with Article 774 bis: a restitution claim over a sum of money reserved by the deceased is no longer deductible, and the corresponding value is taxed in the hands of the bare owner. The earlier case law remains useful for proof of the debt, for the statutory characterisation of the quasi-usufruct and for cases the authorities exclude from the text.

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Our areas of intervention

Quasi-usufruct agreement

The agreement organises the rights and obligations of the usufructuary, sets the amount of the restitution claim and constitutes evidence of the debt vis-à-vis the tax authorities.

Drafting of the quasi-usufruct agreement (base, term, restitution arrangements)
Establishment of a certified date, registration or notarial deed (French Tax Code art. 773, 2°)
Security and reinvestment clauses to protect the bare owner
Possible indexation of the restitution claim
Coordination with the existing dismemberment of ownership

Article 774 bis of the French Tax Code

The Finance Act for 2024 introduced the non-deductibility of certain restitution claims. Analysing the scope of the rule and its exceptions determines the effectiveness of the structure.

Characterisation of a quasi-usufruct over a sum of money in respect of which the deceased had reserved the usufruct
Review of the statutory exceptions (usufruct of the surviving spouse, whether elected under intestacy rules or granted by a gift between spouses or a will, art. 757 and 1094-1 of the French Civil Code; debt over a sale price)
Assessment of the principally tax-driven purpose test for debts over a sale price
Consequences for the bare owner: inheritance transfer duties charged on the non-deductible portion
Neutralisation of the double taxation provided for by the statute

Gift with a reserved quasi-usufruct

A gift of a sum of money with a reserved quasi-usufruct allows the donor to retain the enjoyment of the funds while transferring the bare ownership. Its tax treatment has been profoundly modified.

Structuring of the gift of a sum of money with a reserved usufruct
Analysis of the non-deductibility of the claim arising from such a gift (art. 774 bis)
Alternatives: gift in full ownership, gift of securities, controlled reinvestment
Coordination with overall estate planning
Integration into a financial taxation strategy for private wealth

Quasi-usufruct over a sale price

When a dismembered asset is sold, the usufruct may be transferred onto the price by subrogation, giving rise to a quasi-usufruct. This case receives specific treatment under Article 774 bis.

Transfer of the usufruct onto the sale price (real subrogation)
Distinction from a quasi-usufruct arising from a gifted sum of money
Documentation of the transfer agreement and of the restitution claim
Securing deductibility where the statutory exception applies
Monitoring of reinvestment and of the security granted to the bare owner

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Lead counsel, Jonathan Bensaid

Founding partner Jonathan Bensaid leads the firm's private wealth and succession practice: dismemberment of ownership, quasi-usufruct, gifts, fiducie and asset transfers. He advises families, business owners and holders of mobile wealth on the structuring and securing of their transactions, in France and along the French-Swiss axis between Paris and Geneva. The firm aligns the quasi-usufruct agreement with the constraints of Article 774 bis of the French Tax Code in order to preserve the tax coherence of the transfer.

Jonathan Bensaid Founding partner, Wealth & Succession

— FAQ

Frequently asked questions

What is a quasi-usufruct?

A quasi-usufruct is a usufruct over consumable assets, that is, assets which cannot be used without being consumed, principally sums of money. Article 587 of the French Civil Code then allows the usufructuary to dispose of them freely, subject to the obligation to return, at the end of the usufruct, property of the same quantity and quality, or its value assessed at that date. The usufructuary becomes the owner of the funds but remains the debtor of a restitution claim owed to the bare owner.

What is the restitution claim?

The restitution claim is the right of the bare owner to obtain, upon the extinction of the quasi-usufruct, the restitution of a value equivalent to that of the assets consumed by the usufructuary. When the usufructuary dies, this claim constitutes a debt of the estate. In principle, it is deductible from the taxable estate, which reduces the base for inheritance transfer duties, subject to the restrictions laid down by Article 774 bis of the French Tax Code.

What does Article 774 bis of the French Tax Code, introduced by the Finance Act 2024, provide?

Article 774 bis of the French Tax Code, introduced by the Finance Act for 2024, disallows the deduction from the taxable estate of payable restitution debts relating to a sum of money in respect of which the deceased had reserved the usufruct. This case covers, in particular, the gift of a sum of money with a reserved usufruct. In practical terms, the restitution claim corresponding to that sum of money can no longer reduce the inheritance tax base. The value of the non-deductible debt gives rise to inheritance transfer duties payable by the bare owner, calculated according to his or her degree of kinship with the usufructuary; any duties paid when the usufruct was created are credited against those due on death, which avoids double taxation.

What are the exceptions to the non-deductibility rule of Article 774 bis?

The statute reserves two situations. The non-deductibility rule does not apply: to usufructs resulting from the application of Articles 757 or 1094-1 of the French Civil Code, that is, the usufruct elected by the surviving spouse under intestacy rules (Article 757) or granted to the spouse by a gift between spouses or a will (Article 1094-1); nor to restitution debts incurred over the sale price of an asset in respect of which the deceased had reserved the usufruct, provided it is demonstrated that such debts were not incurred for a principally tax-driven purpose. The precise characterisation of the quasi-usufruct and the analysis of its origin are therefore decisive in assessing deductibility.

Is a gift of a sum of money with a reserved quasi-usufruct still worthwhile?

It retains an interest in terms of enjoyment, as the donor keeps the use of the funds, and of transfer of the bare ownership. However, since Article 774 bis of the French Tax Code, the restitution claim arising from such a gift of a sum of money is no longer deductible from the donor's estate, which neutralises the inheritance tax advantage formerly sought. The choice between this configuration and other structures (gift in full ownership, gift of securities, controlled reinvestment) must be assessed case by case, within an overall estate planning strategy.

How can a quasi-usufruct agreement be secured?

The quasi-usufruct agreement must be drawn up in writing and precisely organise the base, the term, the restitution arrangements and, where appropriate, the security granted to the bare owner. To be enforceable against the tax authorities and to allow the deduction of the debt where permitted, it must acquire a certified date, through a notarial deed or registration. Article 773, 2° of the French Tax Code makes the deductibility of debts granted by the deceased in favour of his or her heirs conditional upon rigorous proof by authentic instrument or by private deed bearing a certified date prior to the opening of the estate.

Why is the certified date of the agreement essential?

The certified date establishes beyond dispute the existence and the anteriority of the restitution claim. Without it, the tax authorities may challenge the reality of the debt and refuse its deduction, or even treat it as a disguised gift. Article 773, 2° of the French Tax Code requires, for debts granted by the deceased to his or her heirs, proof by authentic instrument or by private deed having acquired a certified date before the opening of the estate. Documenting the quasi-usufruct and conferring a certified date upon it is therefore a condition of its recognition for tax purposes.

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— See also

Wealth-planning topics frequently connected with the quasi-usufruct and the restitution claim.

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Updated: 6 October 2026

Sources

French Civil Code, Articles 587, 600, 601, 621, 757, 1078, 1094-1 and 1377 (Légifrance, consulted 6 October 2026)
French Tax Code, Articles 768, 773, 774 bis, 777 and 779; Article 26 of Law no. 2023-1322 of 29 December 2023 (Finance Act for 2024); Article L. 112-2 of the Monetary and Financial Code
BOI-ENR-DMTG-10-40-20-20 (26 September 2024), paras. 60 and 200 to 350
Court of Cassation: First Civil Chamber, 4 November 2020, no. 19-14.421; Commercial Chamber, 27 May 2015, no. 14-16.246, 15 December 2021, no. 19-10.554 and 11 October 2023, no. 21-12.732 (Légifrance)

Cette note présente l'état du droit à sa date de publication et ne constitue pas un avis juridique. Chaque situation appelle un examen particulier.