How is the French-Spanish inheritance taxed in France?

We must distinguish three situations:

A.- A person who resides in Spain dies leaving assets both in France and Spain

To avoid double taxation, the French-Spanish tax Convention of 8^th January 1963 is applied. Article 30 establishes that real estate properties will be the object of a declaration of succession in the country where they are located. For financial assets, article 34 establishes taxation in the State of the deceased's last address.

B.- A person who resides in France dies leaving assets both in France and Spain

Article 36 of the Convention of 8^th January 1963 is applied.

It establishes that notwithstanding the provisions of this Convention, each State keeps the right to calculate the tax on the inherited property that is reserved to its exclusive taxation, according to the rate that would be applicable if all the assets that would be taxable according to their internal legislation were taken into account. In this sense is explained article 750 ter 1º of the General Tax Code which establishes the taxation of movable and immovable assets located in France or outside France.

The French tax administration does not tax immovable assets located in Spain and only keeps their value for the calculation of the taxation rate or the effective rate as allowed by article 36 of the convention (Court of Appeal of Pau, 1^st Chamber, Judgement number 17/2499 of 17 June 2015). In application of article 36 of the convention, France keeps the right to calculate the tax on the inherited property that is reserved to its exclusive taxation, according to the rate that would be applicable if all the assets were taken into account, whether French or not.

How to calculate exactly the effective rate?

You must determine:

1.      The global net estate;

2.      The part corresponding to the heir before the application of deductions;

3.      The rate in force in France after the application of legal deductions;

The effective rate is obtained by dividing the taxation obtained in point 3 by the part of the heir obtained in point 2 and by multiplying the result by 100. You should then calculate, by applying articles 30 and 34 of the Convention, exclusively based on the estate taxable in France. The final taxation is obtained by applying the global effective rate to the part of the heir after application of legal deductions.

C.- An heir who has the tax residence in France receives assets located in Spain from a deceased residing in Spain.

Article 750 ter 3º of the General Tax Code allows to tax in France the assets located abroad received by an heir with fiscal residence in France, as long as that heir has had his tax residence in France for at least six years throughout the last ten years before the receiving the assets. However, international tax conventions may exclude certain assets from taxation in France, especially if said assets are located in a State that has signed a convention with France, such as the case of Spain. In application of article 55 of the French Constitution of 04^th October 1958, "Treaties or agreements duly ratified or approved shall, upon publication, prevail over Acts of Parliament". In such conditions, articles 30 and 34 of the convention of 08^th January 1963 will be applied between France and Spain.