Inheritance tax: "We paid €300,000, real estate is inheritance poison"

Is inheritance taxation in France fair? Sébastien, a listener of Estelle Midi on RMC, recounted this Thursday that he and his sister paid "€300,000" in inheritance tax to receive €2 million, inherited from their late mother. "Real estate is subject to the highest tax rate in France," he laments.

"I lost my mother three years ago. Despite a set-up with holding companies, my sister and I were unable to avoid the €300,000 in inheritance tax on an inheritance of around €2 million. This is money that has been taxed throughout her life. Real estate has become an inheritance poison; it is subject to the highest tax rate in France," Sébastien, wealth management advisor and listener of Estelle Midi , ranted on RMC this Wednesday.

In France, while Emmanuel Macron abolished the wealth tax (ISF) in 2018, inheritance tax remains. 87% of inheritances received are less than €100,000, and two-thirds are less than €30,000. In fact, nearly half of French households receive no inheritance during their lifetime, and 80% receive no gifts during their lifetime.

"France is one of the world champions in inheritance tax. In direct lineage, for those with a lot of money, we tax up to 45 %," Jean-Philippe Delsol, president of the Institute for Economic and Fiscal Research (IREF), recalled on RMC.

Among those who inherit, the effective inheritance tax rate is on average only 5%, while more than 87% pay nothing at all. However, the idea of taxing inheritance more heavily is a regular one. Last September, the NGO Oxfam submitted the idea to Prime Minister François Barnier.

There would be advantages: firstly for the state coffers: higher taxation would make it possible to recover "more than 160 billion euros in thirty years", just from the foreseeable inheritances of current French billionaires, according to the NGO.

Politically, above all, a reform could partially correct a situation denounced for years by many economists: the growing weight of inheritance in society. From 35% in the early 1970s, the share of French wealth derived from inheritance has risen to 60%, according to a report published in 2021 by the Economic Analysis Council (CAE).

"Is it fair to tax people who have saved, who have made profits by working and selling products and services? [...] Why would we want people to be unable to give their children the money that belongs to you, when you can give it to charities with a tax deduction?" continues Jean-Philippe Delsol. "What justifies the fact that, because we die, we have to pay [...] We need to find the right balance and make things evolve."

Meanwhile, Marlene Engelhorn, a descendant of Friedrich Engelhorn, the founder of the German chemical and pharmaceutical company BASF, became a multimillionaire when her grandmother, Traudl Engelhorn-Vechiatto, died in September 2022. The campaigner for taxing the wealthy decided in 2024 to redistribute €25 million, or more than 92% of her inheritance, as reported by Le Monde this Wednesday. Seventy-seven organizations were selected, including associations that support women and protect the environment.