What are the rules when grandchildren inherit in place of their parent?

Mrs. I. leaves her estate to her son and daughter upon her death. She had made two donations to them before her death. His daughter, not needing his share of the inheritance, decides to give up the inheritance in favor of his 3 children. These come by representation to the estate of their grandmother.

The tax authorities, after checking the declaration of succession, call into question the application of the progressive scale to the share of the estate of representatives (article 777 of the French general tax code - CGI). She requests the integration of the donations that the deceased had made to her daughter less than 15 years before her death. The result for grandchildren is an adjustment of €333,857 in fees, with €20,699 in default interest, for a total of €354,556.

Grandchildren go to court.

Should gifts previously received by the mother be taken into account for the liquidation of inheritance tax due by the grandchildren?

Public Service replies:

The Court of Appeal of Paris valid in a judgment of 6 january 2025 the decision of the tax administration: in order to liquidate the inheritance tax due by an heir, the donations made to him by the deceased less than 15 years before death are taken into account for the application of the CGI progressive scale.

Grandchildren appeal to the Court of Cassation. The Court of Cassation overturns the decision of the Court of Appeal in a judgment of 8 july 2026 :

• she quotes Article 805 of the Civil Code which provides that « the heir who renounces is deemed never to have been an heir »;
• it recalls what the CGI mentions (article 784) on the collection of transfer tax free of charge (DMTG): « the value of the assets included in the declaration of succession is increased by that of the assets which have been the subject of previous donations made by the deceased to the sole donees, heirs or legatees ».

Thus, for the Court of Cassation, since the surrendering mother is deemed never to have had the status of heir, the gifts she received from the deceased were never ‘previous gifts made by the deceased to the donees, heirs or legatees’. The grandchildren, who come by representation, cannot therefore be opposed donations which, retroactively, never existed fiscally between the deceased and their author. There is no provision in the French general tax code for representatives. The Court of Cassation therefore agrees with the grandchildren.