Reporting Requirements for UK and French Trusts

Reporting is fairly common in the UK, with the HMRC requiring trustees to report their income and capital gains annually.

It used to be the case that a trust only needed to be registered if there was a tax liability, but this has been abolished in favour of a widened scope which now requires the majority of trusts to be registered with HMRC, regardless of whether the trust has a tax liability.

For example, a life interest trust must now be registered. An example of a life interest could be where a husband has died. He has left his home to his wife for her to use it during her lifetime. On her death, the house will pass to his children from an earlier marriage. Although there is no income being made by the trust, as the wife is living at home, HMRC must now be informed.

Trusts are not a French legal structure.

That said, the French tax authorities do recognise trusts. To avoid being hit with a steep penalty of up to €20,000, trusts that have a connection to France must meet certain reporting requirements.

Broadly speaking, these obligations will apply if the settlor, trustee or beneficiary is either a French resident or the trust owns French assets.

There is a strict time limit to report, so it is important that if you think a trust has a connection which needs to be reported in France, you take advice about this sooner rather than later.

Earlier this year, you may have come across the news of the recently implemented Declaration d’Occupation, which requires property owners to declare the occupancy status of their property. This is for the benefit of ascertaining which homeowners are eligible to pay taxe d’habitation.

The deadline to submit the form found on the impots.gouv.fr website was 30 June 2023, which has now passed. However, many people, especially non-residents, were not aware of this. If you think that you need to complete one of these forms, you still can, but you may be subject to a penalty of €150 for failing to submit the form on time or providing incorrect information.