Anahita Barbe and David Anderson, solicitors at RWK Goodman (Interleges Member firm in the UK), discuss inheritance issues for Monegasque residents with property in France –
It is often the case that residents of Monaco own a second home in France. It is usually best for inheritance tax reasons for such a home to be bought using a Monegasque “Société Civile Immobilière” (SCI) which is a non-trading property holding company. It is similar in form to a French SCI. The Monegasque SCI needs to be incorporated and registered in Monaco, and it is possible to appoint a professional to be the director or gérant.
The reason is that the Franco Monegasque Convention of 1950 provides that moveable assets of a Monegasque domiciled person are only taxable in Monaco and not France. Immoveable assets such as land are taxed where the land is situated. Accordingly, a villa in France owned directly in a Monegasque resident’s name is taxable to French inheritance tax in the normal way.
However, the same villa owned by a Monegasque SCI is not taxed in France because upon death, it is the shares in the Monegasque company holding the property that pass, and not the property itself. The Monegasque shares are non-French moveable assets and will therefore be taxed in Monaco. This makes the Monegasque SCI an efficient vehicle in organising succession. There are some other points in the Convention to be aware of so taking professional advice is sensible. RWK Goodman LLP can help here.
To continue reading this article, including the practical considerations to bear in mind when intending to use this structure, please click here.
To read this article in French, please click here.