The trusts: Annual declaration to be presented by the administrator before June 15th

Trust administrators must declare to the tax authorities in France, before June 15 of each year, the market value on January 1st of the assets and real estate, as well as the capitalized products making up the trust (article 1649 AB of the general tax code).

 

THE TRUSTS:
ANNUAL DECLARATION TO BE PRESENTED BY THE ADMINISTRATOR BEFORE JUNE 15th

07/06/2021     


Trust administrators must declare to the tax authorities in France, before June 15 of each year, the market value on January 1st of the assets and real estate, as well as the capitalized products making up the trust (article 1649 AB of the general tax code).

Before indicating the content of this declaration as well as the consequences resulting from the absence of a deposit, it is advisable to give a trust definition.
 

I - Definition of a trust

First of all, here is the definition made by the general tax code (Article 792-0 bis):
A trust constitutes all the legal relationships created, under the law of a State other than France, by a person who has the quality of constituent, by act inter vivos or by cause of death, with a view to placing real estate or rights there, under the control of an administrator, in the interest of one or more beneficiaries or for the realization of a specific objective.

However, the following structures can already be excluded from this reporting obligation:

  • Trusts set up by a company or a group of companies for their own account and whose settlor does not meet the definition set by article 792-0 bis of the CGI (for example, trusts created by companies and dedicated to management of any device);

  • "Unit trusts", similar to undertakings for collective investment in transferable securities (UCITS - OPCVM in France);

  • Trusts established on the basis of the law of another state or territory having concluded an administrative assistance agreement with France with a view to combating tax fraud and tax evasion and meeting the following two conditions:

    • they raise capital from a number of investors with a view to investing them, in accordance with a defined investment policy, in the interest of these investors;

    •  they have characteristics similar to those of “Unit trusts” defined by article 1 of directive 2009/65 / EC of the European Parliament and of the Council of July 13, 2009.

The tax beneficiary of a trust is the person or persons designated as beneficiaries of the trust income paid by the administrator. The beneficiary is also the person or persons who are the capital beneficiaries of the assets or rights of the trust, during the life of the trust or at the time of its extinction. The settlor of the trust can also be a beneficiary, in particular in the situation of an inter vivos trust.
 

II - The tax declaration N° 2181-Trust 2

  1. The obligation to deposit the declaration

The declaration must be filed no later than June 15th of each year (or August 31st when the trust settlor or the beneficiary deemed to be settlor is a non-resident) at the foreign business tax service, Department of Non-Resident Taxes (DINR), 10 rue du Centre, 93160 Noisy-le-Grand.

The reporting obligation exists when one of the following 5 conditions is met:

  • The settlor or the beneficiary deemed to be settlor resides in France for tax purposes on January 1st of the year of declaration;
  • At least one of the beneficiaries resides in France for tax purposes on January 1st of the reporting year;
  • At least one of the assets placed in the trust is located in France on January 1st of the year;
  • The administrator of the trust has his tax domicile in France on January 1st of the year of declaration;
  • The administrator of a trust established or residing outside the European Union acquires real estate or enters into a business relationship in France (since February 13th, 2020).
     
  1. Content of the declaration

Here are the main sections that make up this statement. You can of course contact us for more details or to assist you when filling it out:

  • Identification of the Trust, Name, Headquarter address;

  • Identification of the Trust administrator, Name, Address, Date of birth (SIRET number if a corporation);

  • Identification of the constituents or beneficiaries deemed to be constituents, Name, Address, Date of birth (SIRET number if it is a legal person);

  • Identification of beneficiaries, Name, Address, Date of birth (SIRET number if it is a legal person);

  • Content of the terms of the trust: this concerns the content of the trust deed and any additional stipulations governing its operation, in particular the indication of its revocability or irrevocability, whether it is discretionary or not and the rules governing the allocation of assets or rights placed in trust as well as their products. It is possible to attach a copy, in French, of the trust deed to the declaration.

Information concerning the terms of the trust should not be indicated when the administrator has already filed the declaration of constitution, modification or termination of a trust (No. 2181 TRUST1);

  • Detailed inventory of the assets, rights and products of the trust subject to the levy provided for in Article 990 J of the CGI:

    • Built and unbuilt buildings;

    • Shares of companies for the fraction of their representative value of real estate.

(The levy referred to in this section is not due for capitalized assets or products when they have already been included in the patrimony of the settlor or of a beneficiary deemed to be settlor regularly declared to the immovable wealth tax (IFI) by this taxpayer, or when they are the subject of this declaration in the patrimony of the grantor or of a beneficiary deemed to be grantor who is not liable for the IFI given the net taxable value of his patrimony).

  • Detailed inventory of assets, right and products of the trust not subject to the levy provided for in Article 990 J of the CGI:

    • Built and unbuilt buildings;

    • Shares of companies for the fraction of their representative value of real estate.

            (Real estate must appear in this section when the direct levy is not due);

  • Date and signature.

The information declared by the trust is kept in the "trust register" placed under the responsibility of the minister responsible for the budget.
 

III - Tax sanctions

Failure to file the declaration is punishable by a fine of € 20,000. The settlor and the deemed beneficiaries who fall within the scope of application of the levy provided for in article 990 J of the CGI are jointly and severally liable with the administrator for the payment of the fine.

In addition, in the event of breaches of the trust declaration obligations abroad and in the event of rectification, the tax supplement is accompanied by an increase of 80% when the following two cumulative conditions are met:

  • The foreign trust has not been declared in contradiction with the provisions of article 1649 AB of the CGI;

  • The amounts held via this trust have not been included in the income tax base, of the I.F.I. or free transfer rights.


IV - Taxation of assets placed in a trust

Taxable assets placed in a trust are subject to either the I.F.I. or a specific levy of 1.50%. When the assets placed in the trust are declared to the IFI, the specific levy does not apply.

Consequently, the assets placed in the trust are not subject to the levy:

  • If they are included in the patrimony of the settlor or of a beneficiary and taxed at the I.F.I.;
  • Or if they are declared by the administrator of the trust, when the settlor or the beneficiary is not liable to the IFI (when his net assets including the assets concerned, is less than or equal to the tax threshold set at € 1,300,000).

You can of course contact us for more details and remember to make your declaration before June 15th!