Accounting and tax regime of the trust bandeau

Accounting and tax regime of the trust

The trust is neutral as far as taxes are concerned. This neutrality aims at encouraging the use of the French trust and at the same time it ensures that no tax advantage is given through the settling of trusts whether it is used as collateral or a management trust. Thus, the transfer of assets to a trust estate does not generate taxation.

Tax regime

  • Taxable gains can nevertheless be observed when the asset is transferred at its current value implying that the assets are not to be returned to the settlor’s estate.
  • As a matter of principle, the tax neutrality of the trust allows the settlor to maintain the benefit of certain tax regimes such as the tax integration or the parent daughter regime:

See AFF Press release related to tax regime & amended finance act for 2014

During the execution of the contract, the tax result of the trust is determined at the level of the trust estate and in the conditions defining the own tax situation of the settlor, the personal tax liability of the trustee who does not hold the assets in his own estate is not taken into account.

Once determined, the tax result is integrated in the personal result of the settlor for the amount of the rights it owns in the trust estate.

Registration fees

Movable assets: the trust agreement has to be registered within a month following the signature of the agreement. The registration fees are 125€.

Real estate assets: the transfer of real estate assets to a trust generates the following costs:




Notary’s fees

0,825 %
(transfer of ownership + VAT)

Current Value of the asset

Tax regarding the transfer of real estate property

0,71498 %

Current Value of the asset

Registrar’s of montgage salary

0,10 %

Current Value of the asset

Accounting regime

The article 12 of the law enforcing the French trust, dated February 19th 2007, provides that the assets transferred constitute a special purpose estate. The operations affecting this trust estate are independent from the trustee’s personal account. The bookkeeping of this account is performed by one or several auditors appointed by the trustee.

The Opinion n°2008-03, February 7th 2008 of the National Accounting Council regarding the bookkeeping of the trust operations indicates that “the special purpose estate can include the assets and liabilities inducing the transfer of a net positive asset or a net liability. The transfer of isolated liabilities is forbidden”.

When the assets are transferred in the special purpose estate, a counterpart has to be registered in the settlor’s book. As long as the trust remains into force, the settlor’s right or duties are limited to the income or costs generated by the assets which are not at the disposal of the settlor. At the end of the trust, the rights or duties of the settlor are the in kind or in value return of the assets.

The control criterion is used to assess the value of the transferred elements by the settlor to the trust estate.

The settlor is considered keeping control of the assets:

  • When the settlor is the only beneficiary;
  • When the settlor keeps almost all the risks and benefits regarding the transferred assets;
  • When the settlor retains the benefit of the residual interest on the assets at the end of the contract through their return in full ownership with the restoration of right of perpetual usufruct.

If the settlor remains in control of the assets, the transferred assets from the settlor’s estate are assessed to their current value. The assets or liabilities registered in the settlor’s book are assessed the same way.

Avis n°2008-03 du 7th febrary 2008 du CNC