Inheritance Tax - Late Payment and Penalties
24th Feb 2025
A court rules on the late filing of an inheritance tax declaration due to administrative delays.
In a case that was recently heard in the French Supreme Court, the Cour de Cassation, heirs contested the imposition of tax penalties on the estate of their deceased, who died aged 30 years in a traffic accident in Laos in 2016.
The heirs were his father and brother.
The estate consisted mainly of a life insurance policy (assurance vie) in the amount of €409,656, which was only finally paid out in January 2019, after difficulties in unblocking it in Laos.
The heirs submitted the inheritance declaration on 31st January 2019 and paid €101,589 in taxes.
The delay of more than two years in relation to the deadline resulted in surcharges and late payment interest of €16,457.
The law requires that, where the deceased died abroad, an inheritance tax declaration be made within 12 months of their death.
The transcription of the death certificate made in the register of the local France Embassy was marred by a clerical error, which stated erroneously that he was residing in Laos at the time of death.
As a result of this error a lower court in France rejected a will that had been made by the deceased, which was finally accepted by an appeal court in 2017. This allowed the notaire to complete the formalities of the succession.
The heirs contested the imposition of penalties on the grounds that they were prevented from meeting the legal deadline for the declaration of inheritance due to a material error on the death certificate and had encountered difficulties in obtaining life insurance funds.
They also stated that they did not have the cash to pay the benefits before receiving the life insurance funds, following which they immediately paid the taxes. The only other asset was real estate, which had to be sold before the duties could be paid. There are no details in the court report as to whether the property had been sold, but it is likely that if the notaire had been unable to complete the formalities, it could not have been sold.
Although the appeal court had rejected the claim of the heirs, the Cour de Cassation ordered total remission of the penalties and surcharges on the grounds that there were administrative errors and that there was no delay between receipt of the proceeds of the life insurance policy and payment of the taxes due.
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