"Communauté à titre universel"

Where France is concerned estate planning must be examined whilst taking into account both the legal and tax aspects of French inheritance law (See our Synopsis of French inheritance law).

The same issues applies to structuring the purchase of French real estate. Indeed, in order to prevent some undesirable consequences from occurring when purchasing real estate there are various different mechanisms that may be used to potentially avoid problems created by French law. The most efficient possibility, when applicable, is the alteration of matrimonial regime to that of the "communauté à titre universel".


The main aspects to be considered in an international inheritance situation

1 Legal aspects of an international inheritance

According to French international private law rules, French real estate is governed by French inheritance law. As such, we need to concentrate on the following aims when dealing with French real estate in an international situation :
  • - try to limit the applicability of French inheritance law and its restrictive nature (NB it is impossible to disinherit certain categories of beneficiary) which can even overrule a testator's intentions;
  • - nticipate any conflict of law that may arise in the application of these provisions in an international situation.


  • 1.2 Tax aspects of an international inheritance

    According to the territoriality principle of international tax law (as confirmed by most bilateral tax treaties), the transfer of a property situated in France is governed by French tax law.

    It is therefore necessary to keep in mind the main provisions of French inheritance tax law insofar as it is likely to apply to the transfer of French property upon death.

    Unlike in other jurisdictions, inheritance tax in France is levied on each beneficiary's share of the estate and not on the estate as a whole. The level of taxation depends on the beneficiary's relationship with the deceased (as indicated below).

    Between descendants or ascendants
    Bands (in EURO) Rate Deduct
    0 to 7.600 5%
    7.600 to 11.400 10% 380
    11.400 to 15.000 15% 950
    15.000 to 520.000 20% 1.700
    520.000 to 850.000 30% 53.700
    850.000 to 1.700.000 35% 96.200
    above 40% 181.200


    Between spouses
    Bands Rate Deduct
    0 to 7.600 5%
    7.600 to 15.000 10% 380
    15.000 to 30.000 15% 1.130
    30.000 to 520.000 20% 2.630
    520.000 to 850.000 30% 54.630
    850.000 to 1.700.000 35% 97.130
    above 40% 182.130


    Between brothers and sisters
    Bands Rate Deduct
    0 to 23.000 35%
    above 45% 2.300


    However each of the above beneficiaries benefits from a tax free allowance. The amount is € 50,000 per child and € 76,000 for the surviving spouse.

    As French tax law must be applied with the above consequences, it is advantageous to consider a mechanism provided by French tax law : the "communauté à titre universel".



    The "communauté à titre universel" ("CTU")

    French law allows couples to hold their assets in various ways in the form of matrimonial regimes. A matrimonial regime is a type of agreement between husband and wife signed either before or during the marriage, the purpose of which is to generally govern the status of ownership of their assets. The two most frequently used regimes are "séparation de biens" and "communauté réduite aux acquêts".

    The CTU is one of the matrimonial regimes available under French law. The main advantage of which is that it can be limited (according to The Hague Convention), to only the French real estate owned by the couple.

    Under the CTU, married couples hold all of their French real estate jointly (it can be likened to a joint tenancy under common law), and following the death of one of the spouses, the French assets pass directly to the survivor.

    1 Advantages of the "communauté à titre universel"

    This matrimonial regime is often used in France as a method of estate planning, as it prepares the settlement of a married couple's estate and has certain advantages in relation to French tax and inheritance law.

  • Tax advantages:

  • When a married person dies, there are two stages to the transfer of the estate. The first is that the "common" assets are divided between the surviving spouse and the deceased's estate according to their Matrimonial Regime. The second is that the deceased's estate (including their share of the "common" assets) is distributed to the relevant beneficiaries.

    However, with the CTU, the deceased spouse's French real estate passes by survivorship directly to the survivor in its entirety (including debts). In such a case, through the concept of "avantages matrimoniaux", French law considers that this transfer of property does not give rise to any tax or duties.

  • Legal advantages:

  • - the main legal advantage is that this provides the surviving spouse with full legal title to the estate, and supplements the small share otherwise granted to the survivor under French law.
  • - another legal advantage is that the remainder of the estate only passes to the remaining beneficiaries following the death of the surviving spouse. This may therefore avoid the problems of legal capacity which may exist for those who have minor children following the first death of a parent, and accordingly avoid any conflict of law.


  • 2 Disadvantages of the "communauté à titre universel"

    However, we should also consider possible disadvantages that could occur in a international inheritance situation.

  • Tax disadvantages:

  • - as is often the case in tax matters, there is no absolute guarantee that the above advantages will remain in the future.
  • - the CTU postpones the distribution of the couple's assets in favour of their children until the death of both spouses and accordingly the tax-free allowances afforded in favour of children only apply once.


  • Legal disadvantages:

  • - the CTU is particular to France and may have to be justified, particularly in common law countries. Specific problems may arise for example should creditors exist within a common law country.
  • - a matrimonial regime generally governs all of the assets owned by spouses, whereas in this case and according to The Hague Convention it would only apply to French real estate (excluding all the personals owned by the spouses).
  • - we would recommend that the CTU route should not be followed if one or both spouses have children from a previous marriage. As this would result in a possible "action en retranchement" (i.e. it may be contested) against the surviving spouse by the child or children of the previous marriage. Subsequently, the advantages of the CU would be reduced.


  • 3 Practical aspects of the "communauté universelle de biens"

    Should a couple wish to enter into a CTU, a deed of "changement de régime matrimonial" (alteration of matrimonial regime), should be drafted, limiting the scope of the new regime to real estate situated in France.

    It should be noted that this deed, which must be signed before a notaire, requires the simultaneous and physical presence of both spouses.

    In relation to costs, fees and disbursements, these are generally from 300.00 Euros up to 800.00 depending on the notaire's time spent and his fees.

    Once the alteration has been made, any further purchase of property would not incur any additional costs (outside the standard conveyance costs).

    However, should one of the spouses already own property in France at the time of the alteration (insofar as the alteration relates to the properties situated in France), the additional costs would be incurred:
  • - a land registry fee of 0,10 % of the value of the property,
  • - a notarial fee of 0,275 % of the value of the property (in this the fees would not be charged),


  • Finally, it must be noted that once the above change has been made, any disposal of property held under the CTU requires joint signatures.

    By Maître Laurent Delanoë
    notaire in Moutiers (Savoie)
    SCP DELAHAYE et SALEUR