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April 8, 2022

French Tax Authority releases new guidelines impacting trust reporting requirements

Executive summary

On 30 March 2022, the French Tax Authority (FTA) published new guidelines regarding the reporting obligations of trustees (often referred as the “French mini–Foreign Account Tax Compliance Act- FATCA” rules) provided under Article 1649 AB of the French tax code (FTC) and Articles 369 to 369 AB of Annex II to the FTC.

In their guidelines, the FTA notably address the notion of French nexus, the various reporting obligations and related tolerances, possible reporting exemptions as well as additional details on the trust public register.

In addition, France’s 2022 Financial Law, enacted on 31 December 2021, has extended the scope of anti-tax avoidance rules to trust situations. The settlor or beneficiary deemed to be settlor of a trust is presumed to satisfy the 10% holding requirement of Article 123 bis of the FTC.

This Alert summarizes the key provisions of the new guidelines and modification of the anti-avoidance rules.

Detailed discussion


The French mini-FATCA rules provide for a set of reporting requirements for trustees of trusts with a French nexus that consist in:

  • Annual reporting: the annual reporting may or may not include the payment of a specific sui generis tax at a rate of 1.5%, to be filed by the trustee by 15 June of the relevant reporting year. Note that trustees should report annually the market value on 1 January of the year of the following: 
    • For trusts with exclusively non-French tax residents involved: all assets and right located in France and capitalized income placed in the trust
    • For trusts with at least a French tax resident involved: all assets and rights located in France or outside France and capitalized income placed in the trust
  • Event-based reporting: the event-based reporting is filed in relation to the set-up, modification and/or termination of a trust within one month of the specific event relating to the trust

Due to the French wealth tax reform in 2018 (replacement of the wealth tax “Impôt de Solidarité sur la Fortune” or “ISF” by real estate wealth tax called “Impôt sur la Fortune Immobilière” or “IFI”), prior guidelines on trust reporting obligations had been withdrawn by the French tax authorities. The lack of comments on trust reporting obligations created some uncertainties in the application of such rules by trustees.

In this respect, the new guidelines provide more clarity on the interpretation of the rules.

General French nexus rules

The FTA guidelines confirm that trustees have reporting obligations towards the FTA in the following situations in case of a French nexus, i.e., where:

  • The trustee, the settlor, one of the beneficiaries or beneficiaries deemed settlor of the trust is a French tax resident in accordance with Article 4 B of the FTC as of 1 January of the reporting year; and/or
  • One or more of the assets or rights placed in the trust are located in France within the meaning of Article 750 ter of the FTC; for the annual reporting, such situation is appreciated as of 1 January; and/or
  • The trustee is established or resident outside the European Union (EU) and it acquires real estate in France or establish an ongoing “business relationship” with certain French business professionals (according to Article L. 561-2-1 of the French Monetary and Financial Code)

Annual reporting obligations

Trustees have annual reporting obligations where there is a French nexus as of 1 January. Nevertheless, the guidelines seem to indicate that an annual reporting may be due even in the absence of a French nexus as of 1 January in the following situation: the trustee is established or resident outside the EU and it acquires real estate in France or establish an ongoing “business relationship” with certain French business professionals (according to Article L. 561-2-1 of the French Monetary and Financial Code).

Event-based reporting obligations

An event-based reporting (Tax form 2181-TRUST 1) has to be filed within one month of certain events such as the setup or termination of a trust, or any modifications (e.g., change in the trust terms, change in the participant of the trust including tax residency, acquisition or disposal of any assets or rights, including any distribution).

According to the new guidelines, when: (i) the settlor and all of the beneficiaries are non-French tax residents; and (ii) the assets of the trust located in France within the meaning of Article 750 Ter of the FTC are composed exclusively of financial investments, the event reporting obligation is as follows:

  • Are subject to the reporting obligation, trustees of trusts in which these financial investments have been placed at the time of their constitution or during subsequent modifications
  • In other cases, trustees of the trusts are only subject to this reporting obligation when the settlor or one of the beneficiaries becomes a French tax resident (within the meaning of article 4 B of the CGI)

Under the event-based section of the guideline, the FTA also indicate that the reporting obligation concerns French securities (valeurs mobilières) that are held directly by the trust, whether they are listed or non-listed, and regardless of the portion of French securities in the portfolio of the trust, as well as non-listed foreign securities that are viewed as predominantly real estate securities in France, and which are then assimilated to French securities.

The French securities indirectly held, included through foreign companies, and which do not constitute a French asset for the purpose of Article 750 ter of the FTC, are not in the scope of the reporting obligation provided for under Article 1649 AB of the French tax code.

Reporting tolerances

With the new French administrative guidelines, the FTA reinstate the application of previous tolerances to facilitate the implementation of trust reporting requirements related to portfolio investment with respect to:

  • Reporting the details of portfolio investment
  • Reporting of sales and purchases of securities within the portfolio investment
  • Reporting of distributions of interest and dividends generated by the portfolio investment

Reporting of portfolio investment details

The guidelines indicate that trustees do not have to directly report the breakdown of their investment portfolio in the event-based form (2181 TRUST 1 form), for instance, at the time where the investment portfolio is placed in trust or in the annual form (2181 Trust 2 form), when reporting the fair value of the assets in trust.

The trustees can attach the details of the portfolio investment in a separate appendix to these tax forms and only refer to the portfolio investment in a single line of the so-called tax forms.

This practical concession is granted provided that the two following conditions are met:

  • The trustee must provide an overall description of the portfolio’s securities and include a reference to a document in appendix which details or lists the securities of the relevant portfolio investment
  • The detail must be clear and readable, in French language and on standard A4 sheets of paper. The document in appendix must include all useful and necessary information to identify each security for the purpose of the reporting

When the trustees report the portfolio in the context of the annual reporting of the market value of the assets in trust as of 1 January of each year, the overall market value of the portfolio can be reported in tax form 2181 Trust 2. In addition, the document in appendix must include a detailed list of the concerned securities as well as their respective market value.

Reporting of sales and purchases of securities within the portfolio investment

The FTA considers that once the portfolio is placed in the trust, the successive purchases and sales of portfolio’s securities do not have to be reported by the trustee, as part of the event-based reporting requirements.

The benefit of this tolerance is subject to the proceeds of the sales of the securities either remaining in cash in the portfolio or being reinvested into new securities of the portfolio.

Reporting of distributions of interest and dividends generated by the portfolio investment

Distribution of interest and dividends received from the securities held in trust can be reported annually and globally in respect of each beneficiary. Such reporting can be filed in an event-based tax form in January of the year following the distributions. This provision only applies if the interest and dividends distributed have not been capitalized prior to their distribution and are taxable as investment income. This tolerance is consequently not applicable to distributions of the whole or partial selling price of one or more securities.

Reporting exemption

The FTA confirms the existence of a reporting exemption regarding trusts set up in respect of certain pension or retirement arrangements i.e., where pension rights were acquired by the beneficiaries in respect of their professional activity within the framework of a pension plan set up by a company or a group of companies and for which the trustee is subject to the law of a state or territory which has concluded a tax treaty containing an administrative mutual assistance clause to combat fraud and tax evasion with France.

As a reminder, the French tax authorities also consider that the following trusts do not qualify as trusts for the purpose of the reporting: certain trusts organized to manage employee savings as well as qualifying unit trusts governed by the UCITS Directive 2009/65/CE dated July 13, 2009 and comparable collective investment funds.

Trust public register

The new guidelines confirm the list of professionals entitled to have access to the French trust registry (in line with the Ordinance No. 2020-115 regarding the strengthening of French Anti-Money Laundering and Financing Terrorism published on 12 February 2020).1

Anti-avoidance rules (Article 123 bis of the FTC)

The French anti-avoidance rules of the Article 123 bis of the FTC provides the income of an entity established in a low-tax jurisdiction (according to Article 238 A of the FTC) or in a blacklisted non-cooperative territory and whose assets consist primarily of financial assets must be included in the taxable basis of the French resident individual taxpayer that, directly or indirectly, holds at least a 10% of the entity’s financial and/or voting rights. Such rules apply to trusts.

The change introduced by the 2022 Financial law provides that the 10% holding requirement is presumed to be satisfied in the case of a French tax resident settlor or beneficiary deemed to be settlor. In order to ensure that this new provision is in line with the objective of tackling tax evasion and avoidance, the taxpayer is allowed to prove otherwise. However, a discretionary and irrevocable trust cannot be solely relied upon as evidence of the contrary.

Next steps

Trustees should review the new rules and assess their impact on the scope and nature of their reporting obligations, and notably:

  • Identify the impacts of the requirements regarding annual and event-based reporting and prepare the related reporting to be filed
  • Consider the application of the reporting tolerances for portfolio investments

French tax resident settlor or beneficiary deemed to be settlor of trusts established in low-tax jurisdiction or in a blacklisted non-cooperative territory should analyze whether they are subject to the anti-avoidance rules of the Article 123 bis of the FTC.


For additional information with respect to this Alert, please contact the following:

Ernst & Young, Société d’Avocats, Paris



  1. See EY Global Tax Alert, France implements new rules impacting French trust reporting requirements, dated 25 September 2020.

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


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