Owning French Property as a UK Resident: What Happens on Inheritance?

A British buyer settling into a property on the Riviera often assumes that, once they've lived in France long enough, French rules simply take over. For inheritance tax purposes, that assumption can be wrong in a way that matters — because the UK's definition of "domicile" is not the same thing as where you live.

For UK nationals owning property in France, understanding how the two systems interact — and where they genuinely diverge — is worth doing well before it becomes urgent.

Domicile Isn't Residence

France and the UK are connected by a bilateral convention dated 21 June 1963, dealing specifically with inheritance tax. It does not extend to lifetime gifts, which remain governed by French domestic rules.

The treaty's central concept — domicile — is where things get genuinely unfamiliar for a French audience. Under UK law, domicile is not simply where someone lives. Everyone starts with a domicile of origin, generally inherited from a parent, which can persist even for someone who has never lived in the UK. A person can later acquire a domicile of choice by both living somewhere and forming a clear, settled intention to make it their permanent home — moving to France doesn't automatically achieve this on its own.

On top of this, UK tax law treats certain long-term UK residents as "deemed domiciled" in the UK — broadly, those who have lived there for 15 of the last 20 years — and applies a separate "formerly domiciled resident" rule for people born in the UK with a UK domicile of origin who later moved away and then returned. Someone who considers themselves settled in France for tax purposes may still be treated as UK-domiciled under one of these rules, with worldwide estate consequences. Whether any of this applies to a specific person depends on their individual facts and isn't something a general article can determine.

How the Treaty Allocates Each Asset

Where a conflict arises over domicile, the treaty resolves it through a hierarchy: permanent home first, then the centre of personal and economic ties, then habitual residence, then nationality, and finally mutual agreement between the two tax authorities if none of the above settles it.

Once domicile is established, different categories of assets are allocated differently:

• Real estate is taxed where it's situated — a French property remains within French scope regardless of the owner's domicile.
• Tangible movable property (furniture, jewellery, art) is generally taxed where it's physically located at the date of death, with boats and aircraft taxed where registered.
• Bank accounts, company shares, and most other intangible assets are taxed in the state where the deceased was domiciled under the treaty's definition — not necessarily where the asset itself sits.

The Method Is Credit, Not Exemption

Where both countries have a right to tax the same asset, the treaty resolves the overlap through a credit mechanism rather than simply exempting one side. The state of domicile taxes the worldwide estate, then credits the tax paid in the other state on assets situated there — asset by asset, and capped at the tax that would otherwise have been due on that asset domestically. There's no refund for tax paid abroad beyond that cap.

A Point Worth Knowing About the Tax Itself

UK Inheritance Tax works differently from French succession duties in one structural way: it's a tax on the estate of the person who died, paid before assets reach beneficiaries — not a tax calculated per heir based on their relationship to the deceased, as in France. The headline rate is a flat 40%, though it's tempered by a nil-rate band, an additional residence allowance for a main home passed to children, and a full spousal exemption where the surviving spouse is UK-domiciled.

A Simple Example

Consider a British buyer who has lived in France for eight years, holds a villa near Cannes, and keeps a UK bank account. If they're still UK-domiciled under the treaty's rules — which, given the domicile-of-origin principle, is entirely possible even after years in France — the villa is taxed in France regardless, while the UK account falls within UK scope. Their broader worldwide estate would still be assessed under UK rules, with French tax on the villa credited against it where both systems apply to the same value.

The relevant question isn't how long someone has lived in France, but what their domicile status actually is under UK law — a determination that depends on personal history, intentions, and evidence, not simply years of residence.

Why This Matters When Buying Property

For UK buyers, the ownership structure and the underlying domicile question are worth addressing at the point of purchase, not discovered later. A property acquired without this in mind can create consequences that only become visible to the next generation.