Tax & Accounting Blog

New French Law on the Taxation of Trusts

1042-S, 1099, 6050W, Document and WorkFlow Management, Global Tax Compliance, Information Reporting for Wealth Management, International Reporting & Compliance, ONESOURCE, Tax Information Reporting, Trust Tax, Trusts, W-8 & W-9 Foreign Reporting, Withholding Management July 21, 2012

On July 29, 2011, France enacted a new law on the taxation of trusts. Under the new law, a trustee must disclose certain information about the trust if the trust has a French settlor, beneficiary or French assets. The trustee must file the disclosure by June 15. The government was to provide further details on how to comply with this requirement.

At this time, the French government has not released a form, or provided any guidance. Some experts have said they expect the government to extend the deadline, but as of the date of this blog post, we had not yet received confirmation.

The information the trustee must disclose is the following:
  • The terms of a trust that was in existence as of July 31, 2011;
  • The creation, modification, or termination of a trust after July 31, 2011;
  • The market value of the trust assets as of January 1 of each year.
Failure to file the disclosure can result in a penalty. The trustee, settlor and beneficiaries are jointly liable for the penalty. French settlors and beneficiaries may have separate obligations under the new law. For example, a French beneficiary may need to include his interest in the trust when filing a French wealth tax return.