What issues are important to consider in Franco-Luxembourg wealth planning?

Our first thought might be to assume that wealth planning between the two jurisdictions is straightforward, since Luxembourg are France are so close. But in reality, the technical challenge of juggling two different legal and tax systems is no easy matter. In this interview, Stefania Bidoli and Anne-Gaëlle Van Walleghem, Tax & Estate Planners at Banque de Luxembourg, shed light on how to navigate these aspects.

This article is an extract from Paperjam's Grand Dossier on Private Equity from November 2025

Why are cross-border wealth planning issues so central in Luxembourg?

Anne-Gaëlle Van Walleghem: Luxembourg is very cosmopolitan and an attractive hub for investors from all corners of Europe and from around the world. Many expats also choose Luxembourg for professional reasons. As for the Luxembourg population, many young people leave the country to study abroad, and sometimes settle there permanently.

Stefania Bidoli: We should also mention the many real estate investments by Luxembourgers abroad, including rental properties or second homes where they spend their holidays or part of their retirement. So, there is a whole range of topics to consider when it comes to cross-border wealth planning.

And what about wealth planning between France and Luxembourg specifically?

SB: Unlike in the area of income and wealth taxes, France and Luxembourg have not concluded a tax treaty covering gift and inheritance taxes. Our Luxembourg clients are often surprised and do not understand why their heirs residing in France would be subject to taxation under French rules.

AGVW: Under Luxembourg law, transfer or inheritance tax is only levied on estates or transfers from Luxembourg residents. For non-residents, the tax applies only to real assets located in Luxembourg. On the other hand, under the anti–tax evasion measures introduced in the 1999 Budget Act France taxes beneficiaries who have been French residents for a certain period. However, France does allow beneficiaries to offset foreign tax against French tax, but only those due on foreign assets.

“Unlike in the area of income and wealth tax, France and Luxembourg have not concluded a tax treaty covering gift and inheritance tax.” Stefania Bidoli

What does this mean for succession planning?

SB: Double taxation is the risk when both French and Luxembourg laws come into play, since the two countries apply their own tax rules when it comes to both determining the domicile of taxable persons and the classification and taxation of the assets transferred. This could result in unequal treatment of heirs, depending on whether they are resident in France or Luxembourg.

AGVW: And this is before we come to cases where not knowing the rules or failing to complete certain formalities in France can derail people’s plans. I am thinking in particular of the case of Luxembourg civil companies whose shares are subscribed ab initio in a division of ownership between parents and children for the purpose of acquiring real estate in France. If no precautions are taken, a tax presumption applies that would allow the French tax authorities to consider that the deceased's estate includes full ownership of the shares. What’s more, our clients often focus solely on taxation, which is only one issue among many aspects to consider. They should first pay attention to the civil law aspects involved, since taxation will mainly flow from the legal structure they have put in place.

“Our clients often focus solely on taxation, which is only one issue among many aspects to consider. They forget to consider the civil law aspects that impact their situation.” Anne Gaëlle Van Walleghem

What advice and support do you offer clients in this area?

AGVW: As a first step, we always recommend drawing up a statement of assets that specifies the clients’ matrimonial property regime and the civil law governing their estate. The next step is to compile an inventory of all their assets, detailing their location, as well as the details of all transfers already made (their form, amounts involved, etc.). Finally, it is essential to clearly identify the clients’ aims and their wishes for their children or heirs, taking into consideration the country of residence of each party.

SB: If parents wish to give money to their children by bank transfer, how is this classified? A loan, a “customary gift”, an indirect gift? If the latter, are they aware that the balanced distribution between their children is not necessarily definitive, even if the same amount is transferred to each child? Do they want to retain the right to use and enjoy (usufruct) some of the assets they are gifting? Do they want to skip a generation or share out the inheritance in advance? Whatever their wishes, we are here to help.

AGVW: We’re mindful that our clients’ situations and challenges are different. That’s why we incorporated this component into our solutions to offer tailored support based on our combined expertise.

What unique expertise does Banque de Luxembourg offer that makes it the number 1 choice?

SB: Day after day and week after week, we meet the needs of clients from our neighbouring countries – France, Belgium and Germany. We have built up extensive expertise in cross-border issues.

AGVW: Our multilingual and multidisciplinary teams work in complementary areas of expertise. By working together and pooling this expertise, we deliver for our clients with solutions that simplify complex issue.

SB: Our team’s strength is rooted in good personal relationships with our clients. We take a collaborative approach, making sure our combined skills effectively tackle our clients’ challenges.