International inheritance law has faced diverse notable evolutions in 2015. These changes have an impact on French people and generally speaking on citizens from the European Union (except those from Denmark and the United Kingdom) that are currently living in Vietnam. Particularly, the situation of bank accounts and real estate owned by a foreigner in Vietnam who passed away while living here must be examined with a particular attention for the taxation related to the transmission of the estate.
Important reform, the entry into force of a new Regulation on the 17th of August 2015 concerning European and International estates opened after this date (that is to say when death occurred on or after the 17th of August 2015). This Regulation applies to European citizens (except from the United Kingdom and Denmark) who passed away in a country that is not their native one (within or outside EU) or those who left properties and funds located in different countries.
According to the principle stated by the Regulation, the law applicable to the succession as a whole shall be the law of the State in which the deceased had his habitual residence at the time of death. Therefore, in the case of a French citizen living in Portugal at the time of his/her death, the Portuguese law shall apply to the estate, no matter if it is real estate or movable assets located in France, Portugal or somewhere else in the European Union.
However, for deceases occurred outside the European Union, the classical referral rule to the national law of the deceased may still apply. Accordingly, in Vietnam, the civil code entails the application of French law for movable assets left by a French deceased (bank accounts, company shares). Therefore, a bank will require the presentation of notarized affidavits relating to the identity of the heirs and the devolution of estate according to French law in order to settle the funds of the deceased.
Nonetheless, in case the defunct owned real estate in Vietnam, it is the Vietnamese law which will apply, in conformity with the Vietnamese Civil code. Like in many others jurisdictions, the Vietnamese law shall always apply to real estate located in Vietnam.
Part of Estate located in France is to be distributed under the French law in accordance with the referral rule of the Vietnamese Civil code mentioned above.
But if there is a will, things can be different. The Regulation gives the possibility for any European individual to choose his/her own national law for the whole estate In our previous example of Portugal, the French citizen will be able to choose the French law for the whole estate.
For individuals having their residence in Vietnam, the choice of the French law does not constitute a determinant advantage: The immovable estate of the deceased in Vietnam will still be distributed under the Vietnamese law while the remaining part of the estate is already governed by the French law.
However, a Will made in accordance with Vietnamese law can be recognized in France if, at the time of the death, the deceased was habitually living in Vietnam. In this case, the choice of the Vietnamese law can be interesting if the person does not want to see his/her adult children called to the succession (there is no disposable share for capable children over eighteen in Vietnamese law). Moreover, that might be easier to liquidate an estate in Vietnam on the basis of a document established in Vietnam.
Important point: Taxation is not concerned by the European Regulation. Regardless of the applicable law, Sates can tax the estate in accordance with their national tax law. In particular, several legal grounds allow the French tax administration to tax a part or the whole estate (deceased’s residence, estate asset’s localization, heir’s residence.
As you can see, estate is an important matter. It requires some thinking during the lifetime if you don’t want to leave an inextricable situation to your heirs, which might aggrieve their mourning.
This article is the translation of an article published in French language on the website lepetitjournal.com/hochiminhville, dated 4th September 2016 and shall be not be considered as legal advice but mere general information on the new Regulation on law applicable to matters of succession. For personal legal advice, please contact our firm by clicking on this link.