Legal news

International succession : the new compensatory levy

Since the law of August 17, 2015, the settlement of an international succession is :

(i) whether governed by the law of the State in which the deceased had his habitual residence at the time of his death ;

(ii) or by the law of the State of the nationality of the deceased if he had designated it before his death as the law applicable to the settlement of his succession.

In this situation, the applicable law applies to the distribution of all the assets of the succession, including assets in France. However, the applicable law must not be contrary to the fundamental principles of French law, in other words, French international public policy.

In a recent case law, the judges considered that « a foreign law designated by the conflict rule that ignores the hereditary reserve is not in itself contrary to French international public policy » (Cass. 1st civ., Sept. 27, 2017, n° 16-13151).

In order to guarantee the effectiveness of the hereditary reserve, the mechanism of the compensatory levy was introduced by the law of August 24, 2021 in order to restore the rights of a reservatory heir of which he would have been deprived by the application of a foreign law that ignores the hereditary reserve.

Article 913 of the French Civil Code now provides that « When the deceased or at least one of his children is, at the time of death, a national of a Member State of the European Union or usually resides there and when the foreign law applicable to the succession does not allow for any protective mechanism for the children, each child or his heirs or successors may make a compensatory levy on the existing property located in France on the day of death, in order to be restored in the rights of reservation granted to them by French law ».

To benefit from this mechanism, four conditions must be met :

  • The estate must be subject to a law that excludes the reserve portion of the estate (if this law provides for a reserve portion of the estate that is less than the French reserve portion, no compensatory deduction can be made) ;
  • The deceased or at least one of his children must be a resident or a national of the European Union at the time of death ;
  • Movable or immovable property located in France must be included in the assets of the estate ;
  • The disinherited heir must claim this compensatory levy.

If these conditions are met, the heir concerned will therefore be able to take the property located in France within the limit of the reserved portion that he would have obtained if French law had applied.

In order to guarantee the effectiveness of this mechanism, the notary in charge of the succession has the legal obligation to inform the heirs of their rights under the reserve (article 921 of the French Civil Code).

This mechanism applies to estates opened on or after November 1, 2021.