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Newsletter | Articles France introduces Fiducie trust structure After 15 years in the pipeline a new legal vehicle, which is the equivalent of a trust under Common Law, has been introduced by the French government, giving tax planners a new tool. Fiducie, by Decree 2007-725 of May 7, 2007, is an agreement whereby one or more constituents (settlors) transfer assets, rights, or collateral to a fiduciaire (similar to a trustee) who agrees to manage them for a given period of time (not to exceed 33 years) and to return the assets to certain designated beneficiaries on termination of the fiducie. The constituent, the fiduciaire or third parties can all be designated as beneficiaries. However, only entities subject to corporate income tax may act as constituent of a fiducie and any structure that involves a fiducie with a view to achieve a gift of assets shall be null and void. Previous plans to introduce the trust into France (1989, 1992, 1994) failed owing to legal and tax obstacles: the Civil Code principle relating to the indivisibility of patrimony, and the fear of facilitating tax evasion or money laundering. However, Law 2007-211 of 19 February 2007 has made it possible to remove these obstacles and the new provisions introduced in the French Civil Code (articles 2011 to 2031) provide France with the new structure. A flagship package of tax breaks was also introduced on October 1, 2007. These saw: The cap on the amount of direct tax levied on income lowered from 60 per cent to 50 per cent A tax relief of up to 20 per cent on mortgage interest rate repayments during the first five years Tax breaks to those paying the wealth tax ISF where those subject to it will be allowed to invest in small and medium-sized enterprises and be credited with an equivalent amount against the ISF they are due to pay These changes mean there are exciting times ahead in this market and ILS Fiduciaries is well placed to offer its clients a wide range of options. For more information please contact Stephen Colderwood.