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Draft legislation on fight against fraud and tax evasions: update on impacts for Trustees

The Finance Act 2011 introduced a tough taxation regime for foreign trusts having French connections together with potentially wider ranging tax and reporting obligations imposed personally on trustees.


The French rules apply to all Trusts:

  • Where any of the settlor, deemed settlor or beneficiary is a French tax resident.
  • Or where the trustees hold certain French situs assets, even if the settlor, deemed settlor or beneficiary is not a French tax resident.


The French assembly adopted on 17 September 2013 a draft legislation against fraud and tax evasion. This draft legislation includes two main measures for Trusts with French connexions.


The constitution of a French public registry of Trusts.


This register should be accessible on simple demand and it should operate on the same way as companies’ house registrar. Its scope should aim all Trusts with a French connections. Unfortunately the new provisions are quite wide at this stage and it is not very clear which Trust should be include in this new register.

In any cases, it should put French connected Trusts under fiscal microscope



The increase of penalty in case of non-compliance with the disclosure obligations of the Trustees.


Since 2011, the Trustees have been under an obligation to disclose information in respect of the existence, modification or extinction of the Trust, the specifications of the Trust and the Trust’s assets. This disclosure information must be made if the settlor or a beneficiary is French tax resident, or if a Trust’s assets are located in France. If the Trustees do not comply with this disclosure information, they are liable for a penalty of the higher of either Euros10,000 or 5% of the trust’s assets. The Settlor and Beneficiaries are jointly liable for the payment of this fine. Non-compliance could also trigger the application of a special tax of 1.5%.


Under the new proposed legislation, the penalty for non-disclosure will increase to the higher of either Euros 20,000 or 12.5% of the Trust’s assets…




The French Senate is now examining this draft legislation. If the legislation is voted, this will just create additional issues for Trustees in France. The Trustees impacted by these punitive changes and their wide ranging disclosure provisions should obtain the requisite legal advice to avoid serious penalties which apply to those in default….




Caroline Cohen



Avocat à la Cour

The French Law Practice
Direct Line: +44 (0)20 7483 1114

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October 2013

This article is for general information only and is not intended to provide legal advice


These publications are intended to provide general information and guidance only and are not intended to provide advice to any specific person.

You are recommended to seek professional advice before taking or refraining from taking any actions based on the contents of these publications.

Tax law is subject to change.