Trusts, Beneficial Ownership and Criminal Seizures in French Tax Fraud Cases

Why trusts are under the spotlight in French criminal tax law

For many international families, trusts and foreign holding chains are tools to organise wealth, succession and governance.

In France, however, these same instruments can become central in criminal tax fraud cases, especially when real‑estate wealth or undeclared offshore assets are involved.

A recent ruling by the Court of Cassation clarifies how far criminal courts may go when they order seizures of assets held through a trust, and what they must prove before interfering with property rights.

This is essential reading for anyone using trusts in a complex international tax dispute involving France.

The case: a €94 million real‑estate portfolio held through a Luxembourg trust

In the case examined by the Court of Cassation, a taxpayer was under investigation for aggravated tax fraud, aggravated money laundering and failure to keep proper accounts.

He was suspected of having concealed from the French Tax Authorities a real‑estate portfolio worth more than €94 million, held indirectly through a Luxembourg trust and several intermediary companies, and undeclared for French real‑estate wealth tax (IFI).

The liberty and custody judge ordered the seizure of the proceeds of a real‑estate sale, in an amount equivalent to the tax allegedly evaded.

The investigative chamber (chambre de l’instruction) upheld the measure, considering that, as the ultimate beneficial owner of the trust, the defendant had free disposal of the seized assets.

The Court of Appeal confirmed this reasoning.

The case then went to the Court of Cassation, which significantly tightened the conditions for such seizures.

Beneficial owner is not enough: the Court demands proof of economic ownership

The Court of Cassation overturned the appellate decision.

It held that the mere status of beneficial owner is not, in itself, sufficient to establish that the person has free disposal of the seized assets.

The Court recalled that the concept of beneficial owner under Article 1649 AB of the French Tax Procedure Code, as amended in 2020, covers all natural persons who are trustees, settlors, beneficiaries and, where applicable, protectors of the trust.

It does not automatically mean that each of these persons has effective power to dispose of the underlying property.

To justify a criminal seizure, judges must prove that the defendant is the economic owner of the trust assets—that the trust is only a legal screen interposed to hide their true ownership.

This may be shown through an analysis of the concrete operation of the trust, or evidence that the person holds or exercises management or disposal powers over the property.

For families relying on trusts in complex international tax disputes involving France, this creates a key distinction between formal roles and real economic control.

If you hold French or foreign real estate through a trust or complex structure and are facing, or fearing, a French tax investigation, your exposure to criminal seizures depends on how your structure actually operates—not just on paper.

DPZ Avocats offers a paid 45‑minute first consultation with Delphine Parigi to analyse your trust or holding structure, assess seizure risks and build a defence around beneficial ownership and economic reality.

👉 BOOK A CALL : https://www.dpz-avocats.com/en/contact

How this affects French real‑estate wealth tax (IFI) and international families

The case arose in the context of suspected IFI fraud, with high‑value real estate held indirectly through a Luxembourg trust.

For many families with properties in Paris, the Côte d’Azur or the French Alps, it is common to hold assets via foreign companies or trusts for historical, privacy or estate‑planning reasons.

This decision confirms that French judges can look through such structures, but only if they can demonstrate who is the true economic owner of the property.

For UHNW clients, this means that documentation on how the trust is managed—letters of wishes, trustee minutes, side agreements—can be as important as the trust deed itself.

It also connects with broader issues of French criminal tax procedure and the criteria used to distinguish legitimate structuring from aggravated tax fraud.

Trusts in the wider criminal tax ecosystem

Trusts and similar vehicles often appear alongside other high‑risk elements: undeclared foreign accounts, complex corporate chains, and aggressive planning around residence or inheritance.

In such cases, the authorities may combine reassessments, CIF referrals , searches and seizures as part of a single strategy.

For defence, it is essential to:

• map all roles (settlors, trustees, beneficiaries, protectors) and their actual powers;
• show when and how the trust was created, and for which non‑tax reasons;
• separate what relates to tax fraud intent from what is simply the expression of international life and wealth planning.

This often overlaps with work on international wealth structuring and succession planning,  to ensure that your long‑term governance is defensible even under the spotlight of a criminal judge.

Key points if you use trusts in your structuring

If you hold assets through trusts or similar foreign structures and are in the orbit of the French tax authorities:

• Criminal seizures must respect strict principles of legality, proportionality and reasoned justification, especially when trusts are involved.
• Being labelled a beneficial owner is not enough, by itself, to justify seizing assets; courts must show you are the economic owner with real disposal powers.
• The way your trust operates in practice—who decides what, who signs, who benefits—can make the difference between a confirmed seizure and an annulled measure.
• In complex international tax disputes involving France, you need a defence that covers both the technical trust law aspects and the criminal tax dimension.