Inheritance tax black hole for same-sex couples

THE inequality that same-sex couples from the UK, and elsewhere, face in France can see people have to pay massive inheritance tax bills.

Here a reader of the site, Jerry, who has owned a property in France for nearly four years writes about his own experience of the system following the death of his partner.

I am gay, and have been living with my partner in Southampton since 1972, when the Civil Partnership Act came into force in England in December 2005 we went through the civil partnership ceremony in January 2006.

In November 2004 we purchased a second home in France en indivision – jointly, in equal shares and we remained resident in England, using the second home for breaks that amounted to about 90 days per year.

Whilst in France earlier this year my partner suffered a heart attack and died on April 3.

After our civil partnership ceremony we remade our wills and left our estates to each other. I am his executor, and have filled in the probate and inheritance tax forms in England.

As we are civil partners there is no inheritance tax to pay on his estate in England, and it passes to me free of tax.

The French have a system for same sex partners called the PACS, Pacte Civil de Solidarité, similar to the English civil partnership, which means when one partner dies in France again there is no inheritance tax to pay, and the estate passes tax free to the survivor.

I understand the English recognise the French PACS, but the French do not recognise the English civil partnership. The civil partnership carries the same obligations and benefits to those of marriage, so an English married couple do not have to remarry in France for their marriage to be recognised in France.

I have visited a notaire in France, and they are unsure of the legal situation I find myself in.

We have/had an English civil partnership, but the French are suggesting that as we did not have a French PACS, I should be treated as a single person, and consequently might have to pay French inheritance tax on my partner’s half of the French house, a 60 per cent inheritance tax rate on one half of the value of our house.

This seems a very unfair and discriminatory situation to me as a married English couple are treated as married in France, and do not have to go through another French marriage ceremony.

Indeed, I do not think we would have been permitted to register for a PACS in France, as neither of us are French, nor are either of us resident in France and we already had a partnership agreement in the UK.

Indeed, if we had annulled our UK civil partnership, and then registered for a French PACS, we would have been recognised and covered in both countries. But on what grounds could we have 'divorced', as we were still in a strong, long term relationship?

It would not have been right for us to split, simply to enable us to register for a relationship elsewhere. I cannot believe this discriminatory situation would be accepted in a court of law, but I will be prepared to test it in court if necessary, which I sincerely hope will not be the case.

Surely as a European citizen I have the right to freedom of movement within the European Union, and a right to have a home in France (since I am fully independent financially and not a burden on the French state in any way) and I should not be discriminated against because the French do not recognise the English civil partnership.

The legal black hole that Jerry finds himself in is similar to others which were highlighted on the site a few weeks ago, see French system fails to recognise civil partnerships.

Jerry has written to a number of MEPs to ask them to bring the issue up in the European Parliament, as well as member of the Sénat, Richard Yung, and groups representing same-sex couples in Europe and France.

If you are in a similar situation, or have advice to pass on to others, please feel free to leave a comment below or email me directly.

Related articles:
Route out of inheritance tax nightmare for same-sex couples
French system fails to recognise civil partnerships

Comments

[susie]

Yes, this is an enormous problem. if the couple do not want to rent their property, it's possible to set up an SCI but if they do, there is currently no option (SCI Is not a good vehicle for owning furnished property). Right now it's a grey area and all the Notaire's I spoke to said that it had no resolution as the law currently stands. I hope this will be addressed soon. Good luck.

[Guillaume]

Hello,

I am an independent French Law Consultant based in the UK and I had to deal with such issue last month.

There is no miracle solution but fortunately, I was able to find a loophole which allow to avoid setting up an SCI. For obvious reasons I cannot explain the legal mecanism involved but please feel free to drop me a line if you need assistance.

Best Wishes,

Guillaume