Overseas Chambers of Peter Harris

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c/o Addington Chambers
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London EC4A 2DQ,
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French Trust annual declarations 2181 Trust2 Declaration and Notice

May 7th 2015

 

 

This post dated May 2015 is now out of date, please refer to Peter Harris on + 44 1534 625879 for assistance.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 :

  1. for Form 2181 Trust1 : Cerfa N° 14805 - 03; and
  2. 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.