Tax regime for trusts and annual levy at the highest wealth tax rate

Article 14 of the amending finance act of 29 July 2011 defines the trust in French tax law (Article 792-0 bis of the General Tax Code) and makes assets transferred through a trust subject to gift or inheritance tax. It creates an annual levy (Article 990 J) at the highest wealth tax rate (0.5% after the 2011 reform) on assets placed in a trust that have not been declared for wealth tax by the settlor or a beneficiary, with exemptions for certain irrevocable public-interest trusts and company pension trusts. It introduces a reporting obligation for trustees, with a penalty of €10,000 or 5% of the assets.