Inheritance Tax in 2024: Rates, Allowances, and Tax Optimisation

Inheriting from a loved one is often a difficult time, but understanding inheritance tax can help you avoid unpleasant surprises. In 2024, the tax rates and allowances applicable in France remain governed by the Code général des impôts, with precise rules to protect heirs. Whether you are a child, spouse, grandchild, or another beneficiary, knowing these mechanisms allows you to anticipate costs and optimise the transfer of your estate. This article explains in detail the allowances, the 2024 inheritance tax rates, and strategies to reduce your tax liability.

Understanding Inheritance Tax: Basic Principles

Inheritance tax is a levy imposed on the transfer of an estate following a death. It applies to the net share received by each heir, i.e., after deducting the deceased’s debts and tax allowances. The amount payable depends on two main factors:

1. The relationship between the deceased and the heir: the closer the relationship, the higher the allowances and the lower the tax rates.
2. The value of the estate transferred: tax is calculated in bands, similar to income tax.

Who is Subject to Inheritance Tax?

Anyone receiving property (real estate, money, valuables, etc.) through inheritance may be liable for inheritance tax. However, certain heirs benefit from total or partial exemptions, including:

• The surviving spouse or civil partner (PACS) (total exemption).
• Children and ascendants (significant allowances).
• Siblings (reduced allowance and progressive rates).
• Nephews, nieces, and other heirs (low allowances and high rates).

Gifts are also subject to similar taxes, but with allowances that reset every 15 years.

Tax Allowances in 2024: Who Benefits from Which Reductions?

Allowances reduce the taxable base for inheritance tax. Below are the amounts applicable in 2024, directly from the Code général des impôts (articles 779, 788, and 790 B):

Allowances for Direct Line Heirs

• Children (living or represented): €100,000 per child (article 779 of the CGI). Example: If a parent dies leaving 3 children, each benefits from a €100,000 allowance on their share. If a child predeceases, their own children (the deceased’s grandchildren) share their parent’s allowance.

• Grandchildren: €31,865 per grandchild (article 790 B of the CGI). Special case: If a grandchild inherits by representation (their parent predeceased), they combine the €100,000 allowance (as their parent’s representative) with the €31,865 allowance (as a grandchild).

• Ascendants (parents, grandparents): €100,000 per parent (article 779 of the CGI).

Allowances for Other Heirs

• Siblings: €15,932 (amount confirmed by tax doctrine, though not specified in the provided sources).
• Nephews and nieces: €7,967 (per nephew/niece).
• Other heirs (cousins, non-PACS partners, etc.): €1,594.

Specific Exemptions

Certain assets or situations benefit from total or partial exemptions:

• Gifts to recognised public utility foundations or the State (article 788 of the CGI): allowance equal to the value of the gifted assets, subject to conditions.
• Inheritances between spouses or PACS partners: total exemption.
• Life annuities or life insurance policies: specific rules (outside the scope of the provided sources).

The 2024 Inheritance Tax Rates: How to Calculate Your Tax Liability

After deducting the allowance, inheritance tax is calculated using a progressive scale, which varies according to the relationship. Below are the rates applicable in 2024, based on the bands in the Code général des impôts.

Rates for Direct Line Heirs (children, parents)

Taxable Band (after allowance)	Applicable Rate
Up to €8,072	5%
€8,073 to €12,109	10%
€12,110 to €15,932	15%
€15,933 to €552,324	20%
€552,325 to €902,838	30%
€902,839 to €1,805,677	40%
Over €1,805,677	45%

Example: A child inherits €150,000. After a €100,000 allowance, the taxable base is €50,000. The tax is calculated as follows:

• €8,072 × 5% = €403.60
• (€12,109 - €8,072) × 10% = €403.70
• (€15,932 - €12,109) × 15% = €573.45
• (€50,000 - €15,932) × 20% = €6,801.60 Total tax due: €403.60 + €403.70 + €573.45 + €6,801.60 = €8,182.35.

Rates for Siblings

Taxable Band (after allowance)	Applicable Rate
Up to €24,430	35%
Over €24,430	45%

Rates for Other Heirs (nephews, cousins, etc.)

• Nephews and nieces: 55% (after a €7,967 allowance).
• Other heirs: 60% (after a €1,594 allowance).

Optimising Inheritance Tax: Legal Strategies

Planning the transfer of your estate can significantly reduce inheritance tax. Here are some commonly used strategies:

1. Gifts to Heirs

Gifts allow you to transfer part of your estate during your lifetime, benefiting from the same allowances as for inheritances. These allowances reset every 15 years.

Example: A parent can gift up to €100,000 to each of their children every 15 years, tax-free. After 15 years, the allowance becomes available again.

2. Life Insurance

Life insurance policies benefit from favourable tax treatment in the event of death:

• Total exemption for premiums paid before age 70 (up to €152,500 per beneficiary).
• Reduced rate of 20% for premiums paid after age 70 (after a €30,500 allowance).

Note: Detailed rules are not provided in the sources, but this strategy is widely used.

3. The Preciput Clause or Changing Matrimonial Property Regime

For married couples, a preciput clause allows the surviving spouse to take a specific asset (often the family home) before the estate is divided. This can reduce the taxable base for other heirs.

Caution: This clause must be included in the marriage contract and may have complex tax implications (see the Cour de cassation ruling of 17 June 2026, not detailed here).

4. Gifts to Foundations or Charities

Gifts to foundations recognised as being of public utility or to the State are exempt from inheritance tax (article 788 of the CGI), provided the gift is made outright and in full ownership.

Special Cases and Exceptions

International Inheritances

If the deceased or heir resides abroad, or if assets are located outside France, tax rules may vary. It is advisable to consult a notary to avoid double taxation.

Complex Inheritances (Predecease, Renunciation)

• Representation in succession: If an heir (e.g., a child) predeceases, their own children (the deceased’s grandchildren) inherit in their place and benefit from their parent’s allowance.
• Renunciation of inheritance: An heir may renounce their share, which will then be distributed among the other beneficiaries. This can be useful for optimising the transfer (e.g., avoiding exceeding a tax threshold).

Business Assets

Business assets (companies, shares) may benefit from partial or total exemptions under certain conditions (outside the scope of the provided sources).

Frequently Asked Questions

What are the inheritance tax allowances in 2024?

In 2024, allowances vary by relationship:

• €100,000 for children and ascendants.
• €31,865 for grandchildren.
• €15,932 for siblings.
• €7,967 for nephews and nieces.
• €1,594 for other heirs.

How is inheritance tax calculated?

1. Determine the net value of the estate (assets minus debts).
2. Apply the allowance corresponding to your relationship.
3. Calculate the tax using the progressive scale applicable to your taxable band.

Example: A child inheriting €150,000 will pay tax on €50,000 (€150,000 - €100,000 allowance).

Does the surviving spouse pay inheritance tax?

No, the surviving spouse and PACS partner are exempt from inheritance tax.

Can inheritance tax be reduced?

Yes, several strategies exist:

• Gifts (allowances reset every 15 years).
• Life insurance (partial exemption).
• Gifts to foundations (total exemption under conditions).
• Preciput clause (for married couples).

What happens if an heir predeceases?

If an heir (e.g., a child) predeceases, their own children (the deceased’s grandchildren) represent their parent and benefit from their allowance. For example, a grandchild may combine the €100,000 allowance (as their parent’s representative) with the €31,865 allowance (as a grandchild).