American trust, French resident: 1649 AB reporting for beneficiaries, settlors and trustees

Contents

1. The short answer
2. What France sees when it looks at your trust
3. American trust, French resident: who the law binds
4. The two filings: event declaration and annual declaration
5. What ignoring the regime costs
6. Income, capital or inheritance: how a payment is taxed in France
7. Gift and inheritance tax on a trust transmission
8. Worked example: one year, three payments, two readings
9. Who does what: beneficiary, settlor, trustee
10. What to do first

The short answer

American trust, French resident: the trustee files, not you. Once a settlor or any beneficiary is tax-resident in France on 1 January, the trustee must file form 2181-TRUST2 by 15 June each year and form 2181-TRUST1 within a month of any change, a distribution included. Each missed filing carries a €20,000 fine. The settlor and beneficiaries ‘subject to’ the article 990 J levy are jointly liable; the tax authority limits this to the settlor and deemed-settlor beneficiaries (beneficiaries treated as the settlor by article 792-0 bis, II, 3: for the assets of a trust whose settlor had died when loi n° 2011-900 of 29 July 2011 came into force, and for assets already taxed as a gift or on death under II, 1 and 2), but the text is wider, so take advice if you may be exposed.

What you owe depends on what a payment is. Trust income paid out, realised gains included, is foreign investment income: 31.4% by default in 2026. Capital the trustee traces to the trust’s capital is, on our reading, not income; a gift from the settlor bears gift duty on the family scale. Where the nature is unclear, declaring a gift follows the tax authority’s approach, but can cost less than the income reading: document the payment and take advice rather than pick the cheaper label. What passes on the settlor’s death bears inheritance duty. Ask the trustee for a breakdown of every payment.

What France sees when it looks at your trust

For the IRS, a revocable trust is a grantor trust, taxed as if it did not exist. French tax law starts elsewhere. Article 792-0 bis of the Code général des impôts (CGI, the French tax code) defines a trust as the legal relationships created under a foreign law by a settlor, inter vivos or on death, to place assets under the control of an administrator (the trustee) for beneficiaries. Revocable, discretionary or transparent at home makes no difference.

Two consequences follow. As a rule, France does not look through the trust for income tax: article 120, 9° CGI taxes the products a trust distributes as income from foreign securities. And France wants to know the trust exists: article 1649 AB.

American trust, French resident: who the law binds

Article 1649 AB places the reporting duty on the administrateur, the trustee. It is triggered when the settlor or at least one beneficiary is tax-domiciled in France, when the trust holds a French asset, or when the trustee is domiciled in France; the notice to form 2181-TRUST1 sets the test at 1 January. A trust holding French real estate also owes the 3% tax of article 990 D on it (BOI-PAT-TPC-10-10, § 90).

So the day you become French-resident, a trustee in Ohio acquires a French filing duty it has never heard of. The filings name every beneficial owner: administrator, settlor, beneficiary, protector or anyone exercising effective control (art. 1649 AB, I, 2°).

The two filings: event declaration and annual declaration

The déclaration événementielle (2181-TRUST1) covers the creation, modification or extinction of the trust and its terms. It goes to the recette des non-résidents of the DINR (the French tax office for non-residents) in Noisy-le-Grand within the month after the event (BOI-DJC-TRUST, 30 March 2022, § 210-220). Modification is defined very widely: any change of terms, settlor, beneficiary or trustee, any death among them, any asset placed in or taken out, any distribution. Uncapitalised portfolio interest and dividends may be grouped per beneficiary on one declaration the following January; sale proceeds may not (§ 330).

The déclaration annuelle (2181-TRUST2) reports the market value at 1 January of the trust’s assets and capitalised income, by 15 June (§ 250), worldwide where a person concerned is French-resident (art. 1649 AB, I, 3°). The data feeds a register of trusts and is kept ten years.

What ignoring the regime costs

Article 1736, IV bis CGI (current version in force since 1 July 2026; the amount dates from 2013) reads in full: infractions of article 1649 AB are punishable by a fine of €20,000. It applies to each breach, even where no tax was evaded; the Conseil constitutionnel (France’s constitutional court, n° 2016-618 QPC, 16 March 2017) struck down the old proportional fine of 5% then 12.5% of the assets and upheld the fixed one.

The fine is the trustee’s, but article 1754, V, 8 makes the settlor and the beneficiaries ‘subject to’ the 990 J levy jointly liable. The tax authority reads this as the settlor and the beneficiaries deemed to be settlors who fall within the levy (BOI-CF-INF-20-10-50, § 80); an ordinary beneficiary can rely on that reading, but the statute is wider, so take advice if you may be exposed. Whether either reading reaches a trust with no real-estate assets is not resolved in the sources we reviewed.

Where tax is reassessed because of assets that should have been declared, article 1729-0 A (version in force since 1 July 2026) adds 80% to the additional tax, never less than €20,000, in place of the fine and of the penalties of articles 1728, 1729 and 1758. It attaches to the additional tax (BOI-CF-INF-20-10-50, § 90), so if your own income tax, IFI (the French real-estate wealth tax) or duty is reassessed, it is yours, and it requires that the trust went undeclared and that the amounts were left out of your tax base (§ 100). Before loi n° 2026-534 (art. 84), it reached only the trust’s real-estate assets; that law extended it to all assets. With no transitional provision found, non-retroactivity points to the narrower version for earlier failures, but the prudent approach is to assess back years on the wider one.

Income, capital or inheritance: how a payment is taxed in France

Article 120, 9° taxes the products a trust distributes as foreign securities income. The Conseil d’État’s finance section (Conseil d’État: France’s highest administrative court; opinion n° 406825, 18 April 2023) reads this as refusing trusts tax transparency: distributed products are taxed so whatever their form, capital gains and rents included, and the France-US treaty does not prevent it.

The text reaches products, not everything a trust pays out. The tax authority distinguishes a beneficiary of products from a beneficiary of capital (BOI-DJC-TRUST § 110), and products taxed to income tax on distribution do not in principle also bear gift or inheritance duty, provided the recipient or the trustee can prove they are products and their amount (BOI-ENR-DMTG-30 § 170). On our reading, sums traced to the trust’s capital are therefore not income; no statute or official commentary says so expressly, and article 120, 9° has no carve-out for sums subject to duty.

Rate on income. The 2026 social security financing act raised the CSG (a French social contribution) to 10.6% (CSS, the social security code, art. L136-8, I, 2°): social levies of 18.6%, 31.4% in all, on a distribution received in 2026. For 2025, the levies were 17.2% or 18.6% depending on whether the article 117 quater advance levy was operated, which is not settled for trust distributions: budget for 18.6%.

Grey zones. A lifetime capital payment that is neither income nor a gift (say, a discretionary decision under an irrevocable trust) has no settled treatment: article 792-0 bis, II, 2 covers only transfers on death, while the BOFiP (the tax authority’s official commentary) says all gratuitous transfers through a trust bear duty (BOI-ENR-DMTG-30 § 20). The prudent course we suggest is to declare it as a gift, since the BOFiP keeps within the duties any sum not shown to be products (§ 20, § 170). Be clear about the trade-off: within a parent-child allowance that can mean no duty where the income reading costs 31.4%, in the 60% cases it costs more, and the tax authority may still treat the payment as products. Document it, provision for the income reading where the gift is within your allowances, and take advice. Also unsettled: whether income accumulated and paid out years later is still income, and whether income capitalised before a death, taxed with the estate, can be taxed again when paid out. A year-by-year ledger of income, capitalised income and capital is a useful safeguard.

The US side. The IRS taxes the grantor on all the income, distributed or not; France taxes the beneficiary on what is distributed. One exception to check: article 123 bis can tax a French resident holding at least 10% of a foreign ‘fiducie’ (a trust-like arrangement) under a privileged tax regime, invested mainly in securities, on its undistributed income; its reach to the settlor of a US revocable trust is not settled. The Conseil d’État did not examine the treaty’s article 24 credit, so budget for the French tax without one and claim it only as a documented position.

Gift and inheritance tax on a trust transmission

France taxes trust transfers within the ordinary territorial rules: article 750 ter names trust assets where the donor or deceased was domiciled in France, where the assets are in France, or where the beneficiary has been French-domiciled for six of the previous ten years, subject to treaties (BOI-ENR-DMTG-10-10-30, § 1 and § 300). For assets owned outright by a deceased neither domiciled in France nor French, Article 8 of the France-US estate tax treaty leaves shares and cash to the US alone. No official commentary applies it to trust assets: do not rely on it for them.

Where France has the right, article 792-0 bis, II (in force since 27 June 2026) applies. A transfer that qualifies as a gift or inheritance bears duty on its net value, on the ordinary scale for the settlor-beneficiary relationship; the tax authority’s own example taxes a revocable trust’s assets within the settlor’s estate (BOI-ENR-DMTG-30 § 140). Otherwise, on the settlor’s death a share determined for a beneficiary follows the ordinary scale, a share due globally to descendants bears 45% (top of table I, art. 777), and the rest 60% (top of table III).

Gifts and inheritances alike bear 60% where the trustee is under the law of a non-cooperative State, or the trust was created after 11 May 2011 by a settlor then French-domiciled. The trustee pays the duties on global and residual shares within the article 641 time limits, with a detailed estimated return; the beneficiaries are jointly liable, and must file it, if a trustee under a non-cooperative or non-assisting State’s law does not pay.

Worked example: one year, three payments, two readings

Illustrative and simplified; no real estate in the trust. Claire, a US citizen, has lived in Paris for eight years. Her mother, a US citizen domiciled in New York, created a revocable living trust there in 2015 for Claire. In 2026 the trustee pays Claire €20,000 of the year’s dividends and interest, then €100,000 of capital, then, after her mother dies in New York, a €300,000 share. Claire has had no earlier gift from her mother.

For the IRS, the €420,000 is the mother’s income, gifts and estate; for France, Claire’s. Claire files: the income with form 2047; the 12.8% levy and social levies on form 2778-DIV no later than the 15th of the month following the payment if her household’s 2024 reference income reaches the threshold (otherwise both are charged with her income-tax assessment); the gift declaration; a French succession declaration within twelve months of the death (art. 641). The trustee files a 2181-TRUST1 for the capital payment and for the death (the income may be grouped in January 2027), and the 2181-TRUST2 by 15 June.

Who does what: beneficiary, settlor, trustee

On our reading, a trust holding only listed securities may have little or no IFI or 990 J base; have its holdings checked against article 965 first. If you can operate a trust account abroad yourself, check whether article 1649 A requires you to report it with your own return.

What to do first

1. Identify your French role: settlor, beneficiary, deemed settlor (art. 792-0 bis, II, 3) or trustee.
2. Read the deed and date the residences. Created before or after 11 May 2011, and where was the settlor domiciled then? That drives the 60% question.
3. Tell the trustee France exists, with a French summary of the deed.
4. Get a breakdown of every payment into income, capitalised income and capital, and keep it.
5. Establish 1 January values, worldwide, in euros, every year.
6. Get the back years right: each missed declaration is a separate exposure.
7. Align both countries’ returns. See also Form 5471 and FBAR versus Form 8938.

How Expand CPA can help

Expand CPA is a French-American firm in Paris, New York and Tel Aviv. Our areas of work include:

• reviewing a US trust deed with French eyes;
• mapping the roles to articles 792-0 bis and 1649 AB;
• explaining the French and US obligations that follow for the settlor, the beneficiaries and the trustee;
• setting out the options for missed years, with the exposure on each.

The French trust filings are the trustee’s; we coordinate with the trustee and your US advisers and help you and them meet those obligations. On the points this article flags as unsettled, we set out the prudent course; the outcome cannot be guaranteed. See our French private taxation service.

The French treatment of distributions, the grantor’s US reporting and the treaty position interact, so we look at them together; see also our US tax services.

Frequently asked questions

I am grantor, trustee and beneficiary of my own revocable living trust. Does France really care?

Yes. Article 792-0 bis defines a trust by its structure, not its tax transparency at home, and article 1649 AB applies once a settlor or beneficiary is French-domiciled on 1 January. Holding all three roles changes who signs, not whether the filings exist.

Who files the French trust declarations?

The trustee, wherever they live. You do not sign the 2181-TRUST forms, but settlors and beneficiaries ‘subject to’ the 990 J levy are jointly liable for the €20,000 fine (article 1754, V, 8 CGI). The tax authority limits this to the settlor and deemed-settlor beneficiaries (BOI-CF-INF-20-10-50, § 80); the text is wider, so take advice if you may be exposed.

Is the 12.5% penalty still a risk?

No. The Conseil constitutionnel struck it down on 16 March 2017. The €20,000 fine per breach remains; where tax is reassessed on undeclared trust assets, an 80% surcharge (at least €20,000) applies instead of it.

How are payments from my US trust taxed in France?

It depends on what they are. Income paid out, realised gains included, is foreign securities income (article 120, 9° CGI): 31.4% by default in 2026. Capital the trustee traces to the trust’s capital is, on our reading, not income, but may be a gift from the settlor, taxed on the family scale. What you receive on the settlor’s death bears inheritance duty. Keep the trustee’s breakdown of each payment.

I received capital from the trust while the settlor is alive. Is it tax-free?

Not necessarily. On our reading it is not income, but it may be a gift from the settlor, taxed after allowances (€100,000 from a parent to a child, renewed after 15 years). If its nature is unclear, no text settles it. Declaring a gift follows the BOFiP’s approach, but within your allowances may cost less than the 31.4% income reading: document the payment, provision for that reading, and take advice.

Will I be taxed twice, as grantor in the US and as beneficiary in France?

Possibly. The bases differ and the Conseil d’État left the treaty-credit question open. Budget for the French tax without a credit and take advice before claiming one.