This post dated May 2015 is now out of date, please refer to
Peter Harris on + 44 1534 625879 for assistance. He is not updating
it as each case now merits if not requires individual
attention.
There have been decisions relating to the nature of trusts and
their treatment under French law in the French administratve courts
that will have the effect of changing the guidance given below in
specific types of cases. In particular possibly in relation to
Capital gains realised by Trustees on French situs assets, but also
on foreign assets where a beneficiary deemd contituant or the
constituant is resident in France.
The French administration have published the 2015 set of
declarations and "intercalaires" for trustees on their website
www.impots.gouv.fr. The Declaration no longer contains the
instructions, so the explanatory
Notice n° 2181-TRUST2-NOT is also available separately in
French.
If having difficulty finding these, go to the Documentation tab
on www.impots.gouv.fr , click, then on the
right hand margin click Recherche de formulaires, then enter
2181 in the first block of the line Numéro de formulaire, and you
will see both 2181 Trusts 1 and 2181 Trust 2 available. Select what
you want from the appropriate drop down menu for each form.
If you have difficulty in filling out the page to obtain the
forms and the notices, may I suggest that you put in the Cerfa
Number in the bottom line. The references are :
- for Form 2181 Trust1 : Cerfa N° 14805 - 03; and
- for Form 2181 Trust2 : Cerfa N° 14807 - 03
You should download and read the notice for each form in French,
as there have been changes this year.
NOT recommended that anyone attempt to fill out the
form(s) unless they are fluent in French, as French has to be used
and a slip in declaration can give rise to a penalty. There
is a significant differential between trust concepts as understood
in English and the terms now being imposed by the French. The
issue of correct declaration needs to be clearly identified and
resolved if necessary with advice.
The main points are that the French administration is toughening
up on the form of the declaration, now it has had two prior years
experience, and there is a risk now that penalties will be imposed
for not filling the forms out correctly. The forms and their
computerisation will be used as a trial run for informing the Trust
Register in due course to the extent that this is brought in. [Post
scriptum 2016 : note thta the Register is in force at 30th June
2016, and is informed by past 2181 Trust1 declarations].
Trustees, more so those offshore, will find that their details
are being given increasing compliance importance. Note that for
example, Jersey being a subdivision of the British Isles/UK, a
further ISO 3166 number has to be inserted. These may be found at
www.iso.org. However, you have to pay for it unless you use the free link, kindly
provided to me by Mr Martinez of ISO, who appeared concerned that
the ISO site was being used in this manner by the French
administration. The French administration had forgotten that
elementary point and had not published these on the
www.impots.gouv.fr site. The point of the ISO identification is
that it will later enable the declarations to be synchronised into
FATCA Style information exchange. Jersey Trustees will see
from the Notice that the code is JE, Guernsey is GG; GU being
already allocated to Guam. No priority being given to seniority as
between deemed dependencies.
The Notice curiously differentiates between trusts where no
personal French connection exists through a
Constituant, deemed constituant or
beneficiary, and those where there are. Where there are no
French assets and no personal French connection, neither §6 nor§ 7
have to be filled out in detail. That is stating the obvious.
However where there are either French situs assets or French
personal connections, then both §6 and §7 need addressing and as
appropriate filled out itemising each asset in detail.
Please do not make the mistake of assuming that disposals during
the prior year need to be declared by the Beneficiary for Capital
Gains tax purposes in France, that is not necessarily the case. The
term" personne interposée" used in the French CGT
legislation despite its superficial appearance, is a "faux ami",
referring to individual members of a family, and cannot be
construed as including a trust or a trustee, given the context, and
a trust by definition is not a fiducie. Contact Peter
for details on this aspect.
Following the previous posting, any individuals resident in
France need to be contacted and appraised of what the Trustees are
declaring prior to 19th May, it is now probably the
last minute, for those who make their ISF declaration on their
income tax returns, as the assets will need to be carried to those
returns, albeit only in total. In the absence of
beneficiary/constituant declaration, it may mean that the
Trustee will be held to account for the 1.5% prélèvement levy, and
the French resident required to pay it at the to rate, rather than
their obtaining the relative reliefs available under their personal
ISF régime. Contact Peter for details if necessary
[Post scriptum Note that, following the 2013 amendments to
article 1649AB CGI, taking effect in 2014, French resident trustees
were given until 31st January, 2015 to file their 2181 Trust2
Declaration for January 2014. This was the same law that
introduced the French Register of Trusts]
Those French residents, the minority, who declare later in
the year on the ISF declaration 2015, for residents with an ISF
base of over €2 570 000 or for non-residents in general whose
French ISF basis exceeds the threshhold of €1,300,000. Note that
non-residents with French source income have to use the income tax
form, and need to act now.
If you are filling out the form for the first time, or need
assistance in working out how and what to declare, contact Peter
Harris for advice on what is needed.
We would suggest that it is not a good option simply to attach a
copy of the Trustee Instrument to the declaration, if you do it
must be with a translation, and that translation needs to be
thoroughly checked by a lawyer as the legal quality of translations
is frequently poor and unversed in the equivalences which make the
differences. The standard of internet "dictionaries" remains
technically inadequate for these purposes.