On 15th September 2012, Decree 2012-1050 was published that sets the deadline for filing French tax returns for trusts at 30th September 2012.

Trusts, wherever they are located, must comply with the new French tax obligations, which apply from 1st January 2012.  The trustee is required to comply with certain declaration obligations when:

• The settlor or at least one of the beneficiaries is a French tax resident or
• The trust holds at least one asset or right located in France.

The two filing requirements are as follows:

The General Disclosure Obligation

This requires the trustees to disclose to the French tax authorities the creation of the trust, any modifications to the trust or its termination as well as providing information  on the contents of the terms of the trust.  The Decree sets out the following deadlines:

• For trusts in existence on 31st July 2011 which were either created, modified or terminated between 31st July 2011 and 15th September 2012, the declaration must be filed before 31st December 2012.

• In respect of creations, modifications and termination of trusts occurring as of 16th September 2012, the Decree provides that the trustees must file a declaration within one month after the event.

The Specific Disclosure Obligation

The trustees must disclose the fair market value of the assets and rights held by the trust as at 1st January of the tax year ( 1st January 2012 for this year).  For settlors or beneficiaries who are not French tax residents, only French assets and rights need to be declared.  When they are French tax residents, all assets and rights must be included in the declaration.

The annual return for the specific disclosure obligation is due for filing by 15th June of each year.  However, as 2012 is the first year of application, the filing date has been extended to 30th September 2012.  If applicable, a 0.5% tax must be paid at the time of declaration.

We would recommend that should the above be applicable, a French advisor or lawyer be contacted in respect of this.  If you have any questions, please do not hesitate to contact us.