Now is always a good time for checking your finances if you’re an expat in France. An annual tax check can really pay off.

There always seems to be something going on that can influence exchange rates, savings and financial plans. Covid, war, political instability, energy supply problems, global supply chain issues… There’s been a lot to contend with in recent years. As the economy evolves, so should your financial planning. Robert Kent of Kentingtons, tax and financial advisors, says that now more than ever expats need to think about what all these issues mean for them and, more importantly, what they can practically do about it….

If you spend in Euros, think in Euros

At Kentingtons we meet many people who think very much in the currency of their old home, such as Sterling. But, thinking in a currency that you do not live in can create risk. Brexit has shown us just how much Sterling can move versus the Euro. As a French resident, thinking in Euros does not merely reduce the currency exchange risk, it eliminates it. If you can eliminate unnecessary risk, why not do so?

“But my pensions / rental income (etc) are in Sterling!” you say. This does not prevent sensible planning, using FX companies to maximise currency moves, maintaining your savings and investments in Euros (which makes sense from a French tax perspective, by the way) and forward planning your income requirements.

If you have rental property outside of France / the Eurozone, challenge why this needs to be so. If it is purely an investment, you might be better off to consider selling and creating more Euro income.

Do you have pensions that could be cashed in? For many pensions this can be done, in France, with an effective tax rate of just 6.75%, so worth considering. Could any of your income be turned to Euro revenue?

My point is merely to prompt a rethink. What was the right course of action, when things were first done, may not be right for the way life is now.

Hope For the Best, Plan For the Worst

When it comes to income planning, it makes sense to hope for the best and plan for the worst. Good financial planning is not gambling, it is about creating as much certainty as possible. If you are living in Euros, then ensure you have sufficient Euros to see you through a crisis. A crisis could be in exchange rates, the financial markets, a slowdown in the rental markets, property prices etc. The point is to calculate how much income you might need for the next few years, ensuring that it is easily accessible and usable. A crisis, no matter what the source, should not cause you sleepless nights.

Consider Inflation

Don’t just consider what you need at today’s prices but build in inflation. In France we have seen it go to over 6% from almost nothing. The point is you just cannot guarantee what will happen. So, plan for higher inflation, which means planning on needing a rising income for the next few years, in the hope that you do not need it.

Rethink your investment Strategy

Interest rates at 0% mean that money is eroding in real terms, so a sensible investment strategy is key. Simply keeping it in the bank or under the mattress is unlikely to help. A traditional market investment strategy of 60% of your capital in the markets and 40% in bonds, is out of date. Bonds means that you may be paying them to keep your money (hopefully safely). It does not mean that they do not play a role, however, they have become less central. If you have buy-to-let properties, what happens when they are vacant and / or you need to sell when the market is bad? Property is not always ‘as safe as houses’!

With sensible financial planning, you stand a much better chance of withstand issues when they arise. And an annual tax check can save expats in France money and mean less stress.

Contact the team at Kentingtons for advice, or a free initial consultation at: kentingtons.com

The post Annual tax check for expats in France appeared first on The Good Life France.

As in all aspects of life in France, the differences from the UK are numerous – and that includes marriage.

In Britain, depending on one’s faith, or lack of, one would typically get married in a church, or in a registry office. In France most couples do both! Before being married in a church, the marriage much be officially conducted in the local town hall – the mairie.

And it gets even more confusing. Because, in France there are various marriage regimes, which are effectively marriage contracts in the legal sense. It’s important to choose wisely, as the chosen regime will govern how a couple’s assets are owned. This will also affect how assets are dispersed, including inheritance, explains Robert Kent of Kentingtons, tax consultants for British expats in, or moving to, France.

A choice of marriage regimes in France

In the broadest sense, the three principal marriage regimes in France can be explained as follows:

Séparation des Biens
This is literally translated as “separation of assets”, which is fairly self-explanatory.

Communauté Réduite aux Acquêts
This is the default marriage regime in France. In short it means that everything purchased by the spouses after the marriage is owned by the community, i.e., jointly by the two spouses, even if only one of the two pays.

Communauté Universelle
Everything owned before and bought during the marriage is owned within the community, i.e., jointly by the two spouses.

Marriage problems – when it comes to inheritance in France

Most British couples, in their minds at least, would consider themselves married within a universal community, i.e., all is shared, and very often all is inherited by the surviving spouse. But here’s the issue. In France, the vast majority of couples married in the UK are considered to be married under the Séparation des Biens marriage contract. Why is that a problem? Of course, every case is different, but let us consider one relatively common example.

Mr and Mrs Smith, who have two grown up children, were married in the UK and lived there for many years before moving to France. Each wants their surviving spouse to receive all assets on first death. However, being married under the separation of assets regime means that French inheritance law takes charge.

Inheritance law reveals another notable difference. In the UK you can generally leave all your worldly goods to whoever you like, even the neighbour’s dog, if you wish! In France, however, the children have an absolute right to inherit a minimum percentage of the deceased’s estate as follows:

1 child – half
2 children –  two thirds
3 children or more – three quarters

If we go back to our example, on the passing of Mr Smith, the two children would have a right to two thirds of Mr Smith’s estate.

What can you do to ensure your assets are shared as you wish?

In the UK, you simply write a will, allocating funds to whoever you wish. In France, inheritance planning can be more complicated. However, in certain circumstances it is possible to change one’s marriage regime (contract). And, as in the UK, there are ways in France to plan for the future in a tax efficient way, offering as much protection as possible to all your loved ones, be they from a first or second marriage.

Everybody’s situation is different. Advice given to your neighbour, for example, may be totally inappropriate for you. When you’re looking at long term financial planning, it’s essential to take qualified advice that’s personal to you own specific family set-up.

By Robert Kent of Kentingtons, Tax and Investment Consultants with coverage throughout France and the UK. Find out more or get in touch for advice and support at: kentingtons.com

The post Marriage and inheritance rules in France appeared first on The Good Life France.

The question of French tax residency rules affect anyone who has a home in France. We ask Robert Kent of Kentingtons, the professional tax advisors for British expats in France, to explain what the rules are…

Am I a tax resident in France?

I will start by saying french residency rules are a matter of legislation, not a matter of choice. I am often asked “where is it best to pay taxes … France or the UK?” It must be clear that there is no choice. It just depends where you fall within the rules.

Many people bury their head in the sand when it comes to defining their residence of France. It’s so easy just to stick with what you know and avoid what is foreign. Many people, who do attempt to define their status, try to define their residency of France using the same rules as are used to define residency of the United Kingdom, eg UK law. But this makes no sense at all when trying to define the residency rules of another country.

French Tax Residency Rules

The bad news is that the main laws defining residency of France do not even mention the number of days spent in the country. So, it’s time to throw out the UK rule book! We’re in France! Many people think that the rules on residency are vague. And yes, this can sometimes  be the case. However, very few people fall into this vague category. For most people, their residency position is very clear.

The french tax residency rules are clarified both in Article 4B of the French tax code (the Code Général des impôts or CGI) and Article 3 of the UK/France Double Tax Treaty. Residency is defined using a series of tests:

Where is your principal residence? (Article 4B1a – CGI)

This is also supported by article 3a of the UK / France double tax treaty. If you have one “home” this is easy. If the only “residence” available to you is in France you are French resident. For any property to be viewed as your “residence” it must be available for your use. If rented out it doesn’t count. And  it must either belong to you or be a property you rent with a “formal” rental agreement. Using a relative’s or friend’s address is not sufficient. As a guide, you’re generally required to provide utility bills for the property – in your name.

Just to prove that number of days can literally be inconsequential, there was a case of a businessman who had never been to France. However, his wife lived there, and his children lived and went to school there. Even though he had not entered the country, it was viewed that his principal residence was France as this is where his family was based. The conclusion is that ‘principal residence’ test overrides the number of days test.

If you do own a “residence” in each country, then it is settled by your centre of economic or “vital” interests.

Where do you have a professional activity? (Article 4B1b -CGI)

If you work in France or have a business here, this can make you a French resident. If it is ancillary to your main profession and this is in the UK, for example, it is not necessarily the case. However, if it is your only activity, you will generally be deemed as resident.

Where is your centre of economic or “vital” interest? (Article 4B1c -CGI)

This is supported by article 3b of the UK/France double tax treaty. Ultimately this is where you run your financial life from. For example it may be where your income is paid from. Or it may be where your business interests are and also where you manage your assets from.

Place of your habitual abode

This is where French law and the tax treaty stop overlapping. The tax treaty takes over to decide in which country you are resident. Article 3b states that if your centre of vital interest cannot be determined or there is no principal residence, or “home”,  then it is down to where you have your habitual abode. This does not count the number of days in a country, but merely where you are spending most of your time. If you only spend your time between the UK and France and nowhere else, then it can be simplified as where you spend over 183 days. However, it is this oversimplification that has led to many problems. For instance, if you spend time in a third country, it is possible to be in France for, say, five months and still be considered resident. It’s about where you are spending most of your time.

It is important to note that it is not after 183 days that you become resident. It is from your day of arrival in France. So from the day of arrival – you are assessable to tax in France.

Country of which you are a national

Article 3c states that if residency position still remains unclear, your residency will be decided by the country of which you are a national.

Mutual agreement

Article 3d states that if you are a national of both France and the UK, and none of the other tests make your residency status clear, it then goes to deadlock. Then it’s up to the respective fiscal authorities to decide between them.

Joining the health system

This has nothing to do with tax law, but more to do with making a false declaration. If you are not a resident of France, you have no right to join the French healthcare system. By joining you are openly declaring that you are a resident of France. Many people have found themselves in hot water with the financial authorities because they have joined the French health service. If you do not live in France, do not join the health service.

Conclusions About the French Tax Residency Rules

To be in a “vague residency position”, you would need to have a property in the UK and France. Have the utility bills are in your name. Equal vital interests in each. Spend exactly the same amount of time in each country. And be a national of both countries. If you are working you would need to be exercising your profession equally between the two countries. This is why very few people fall into the “vague” category. Establishing your position maybe somewhat complex, but it is normally perfectly clear.

If you are a resident of France, you are also domiciled in France, since the double tax treaty between the two countries agrees this. More importantly, you are now duty bound to complete a French tax return, declaring your worldwide income. It does not matter where it is paid, where is maintained, whether it is considered “exempt” in France or not, whether you pay tax at source in the UK or not. You must declare everything. Even if you have no income at all, you must still complete a return.

It is unlikely you will be sent a tax return in the first instance. The law says it is your responsibility to obtain one. You can obtain a tax return at your local mairie, tax office or online at www.impots.gouv.fr.

Is paying tax in France bad news?

Not for most people. In many cases the weight of taxation is lower in France than the UK. Obviously, this depends on your situation and the only way to be sure of your position is to seek advice from a qualified professional.

Contact the team at Kentingtons for advice, or a free initial consultation at: kentingtons.com

The post The rules on tax residency for France appeared first on The Good Life France.

For British expats in France, professional and unbiased tax advice can make a real difference to your finances – and your quality of life. Like anywhere else, getting tax paid on time, and getting all the details right is essential in France. And that’s where you may want help and professional advice – the devil is in the detail. And the detail isn’t always easy to discover for British expats who aren’t used to French administration, and how time consuming it can be to deal with.

Luckily, help is on hand. Kentingtons are a qualified tax and investment advice company who have decades of experience helping British expats in France with all aspects of tax. Property wealth tax, income tax, inheritance tax, capital gains tax and succession law – Kentingtons can help you with French tax in all forms. They’re regulated in France by the Autorité des Marchés Financiers (AMF), the French financial regulator. This is the only financial regulation of importance for anyone moving to or living in France.

And if you’re considering moving to France, Kentingtons can help you sort out your finances so that you arrive with everything in good order for a worry-free start to your new life. When you move to France with the intention to live there, you become a tax resident the day after you arrive. This makes you liable to pay tax on worldwide income, gains and real estate wealth, various tax treaties in place also need to be accounted for.

And if you intend to remain in France for a significant amount of time, it is vital that to check your tax status, to be sure that you do not fall foul of the rules.

Plain English – and peace of mind

It’s true when people say that French administration is bureaucratic on another level! And when it comes to tax, the system can be complicated, time consuming and downright frustrating. That’s where professional support can make a real difference. You may need help with your tax in France. You might not want to spend hours dealing with it. Or perhaps, you just want the peace of mind that comes from working with an expert. Kentingtons can support you with every aspect of your tax requirements in France. They provide jargon-free plain English reports so you always know exactly where you are with it all. And you’ll deal with the same person each time. Someone who knows your situation and ensures that you get the best advice possible.

Kentingtons offer national coverage throughout France and the UK. Their expertise can help you make the most of your finances. They will make sure your tax requirements are dealt with in a timely manner and with no mistakes. Peace of mind, tax sorted.

Contact Kentingtons to find out more about their services and book an initial, free consultation: Kentingtons.com

The post English language professional tax advisers in France appeared first on The Good Life France.

Paul Flintham, an International Financial Advisor at Beacon Global Wealth Management explains how French Gift Tax works…

In simple terms, with French gift tax the donor makes the gift. The donee receives the gift and is responsible for paying any tax that is due (droits de donation).

Residency

If the donor is tax resident in France, tax is payable on all worldwide assets transferred in excess of the allowances available.

If the donor is non-resident, but the donee has been a tax resident of France for at least six out of the last ten years, liability arises on all worldwide assets transferred to the donee in excess of the allowances available.

If both donor and donee are non-resident, tax is payable on the gift of real estate only in France.

Relationships

The gift free allowances are only for family members and are variable according to the relationship to the donor. The donor must also be under 80 years old, and the donee over 18 for the allowances to apply.

A gift made every 15 years may be made free of gift tax, provided it does not exceed the exemption limits (below). If the donor dies within the 15 years the gift may then incur a tax penalty.

The exemption limits in 2022 are as follows:

• Spouses/Partners – €80,724 between spouses, PACS and those in civil partnership.
• Children – €100,000 from each parent to each child (or child to parent).
• Grandchildren – €31,865 from each grandparent to each of their grandchildren.
• Brother/Sisters – €15,932 to brothers and sisters.
• Nieces/Nephews – €7,967 to nieces and nephews.

In addition to these allowances, it is also possible to make tax-free family gifts in cash (dons familiaux de sommes d’argent) of up to €31,865 to each child, grandchild, or great grandchild from each donor, or, in the absence of these descendants, to a niece or nephew.

These allowances can be cumulative so, for instance, a child may receive gifts from parents, grandparents and great grandparents individually, without one affecting the exemption limits of the other.

Survivorship Period

Even though a gift may be made tax-free every 15 years, if the donor dies within the 15-year period then the gift is added to the total value of the estate for the calculation of inheritance tax. This process is called the ‘rapport fiscal.’

The child allowances for inheritance tax are the same as those for gift tax. If gifting real estate then the situation can be made easier by applying the ‘reversionary interest’ in the property, whilst the donor retains the ‘life use’ of the property.

If the gifts made are above these exemption limits, then tax is applied rom 5% (less than €8,072 up to 20% (from €15,932 – €552,324).

For more details and information on  how to manage, maximise and protect your assets for you and your family, contact enquiries @ bgwealthmanagement.net

beaconglobalwealth.com

This communication is for informational  purposes only based on our understanding of current legislation and practices which is subject to change and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice form a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained  in this communication is correct, we are not responsible for any errors or omissions.

Beacon Global Wealth Management are members of Nexus Global (IFA Network). Nexus Global EU is a division of Blacktower Financial Management (Cyprus) Limited (BFMCL) and Blacktower Insurance Agents & Advisors Ltd (BIAAL).  Beacon Global Wealth Management is an Appointed Representative of BFMCL which is licensed and regulated by the Cyprus Securities & Exchange Commission (CySEC) – Licence No. 386/20. Beacon Global Wealth Management is an Appointed Representative of BIAAL which is licensed and regulated by the Insurance Companies Control Service (ICCS) – Licence No. 5101

The post What is French Gift Tax (“Droits de Donation”)? appeared first on The Good Life France.

In France, an annual wealth tax is applied in addition to income tax. French wealth tax applies to all residents of France and includes worldwide assets.

We talk to Graham Downie, a consultant with Leggett Immobillier, the award-winning property agency in France about French Wealth tax – what it means and who pays it…

How does the French wealth tax work?

The wealth tax (Impôt sur la fortune immobilière) is known as IFI. It’s a tax on real estate assets for individuals. It replaced the Impôt de solidarité sur la fortune tax (ISF) in January 2018

Who has to pay the wealth tax?

IFI is payable by taxpayers whose real estate assets exceed a limit currently set at 1.3m euros (2021).

The first €800,000 is tax free and tax is then applied on a sliding scale from 0.5% to 1.5% for property over €10m. The French Government has an excellent online tool for calculating your IFI at impots.gouv.fr/portail/particulier/calcul-de-lifi

If you are a fiscal resident, and therefore tax registered in France, you will be subject to the IFI, which is levied on all of your worldwide real estate assets.

UK nationals are not subject to IFI for the first five years of residence. If you’re not resident in France, you’re liable only for French property.

How does the taxation take place?

The taxation is calculated per tax household and a person living alone counts as a full tax household.

Married couples form the same tax household and are therefore subject to common taxation, regardless of their matrimonial property regime. However, there are two exceptions. If spouses are married under the French regime of separation and live separately, each is liable to the IFI but solely on their personal holdings. Also if spouses are in the midst of a legal separation or divorce.

People who live together, or those in a civil union, are subject to common taxation on all of their assets.

Note that property belonging to minors forms part of the estate, and should be declared.

Which assets can be taxed with the wealth tax?

Subject to exemptions, the taxable property in terms of the Impôt sur la fortune immobilier, includes:

• existing buildings (houses, apartments, etc.), and land or undeveloped buildings (agricultural land, open barns etc.). It should be noted that the main residence benefits from a 30% reduction on its value.
• Investments related to real estate: SCPI, OPCI
• A portion (relating to real estate assets) of the redemption value of an Assurance Vie.

Which assets are exempted from the wealth tax?

There are some exemptions:

• professional real estate – property related to the main activity of the taxpayer and of his spouse, civil union partner, cohabiting partner, and minor children. This includes commercial property, retail units, medical offices, etc. Professional furnished rentals are also entitled to this exemption.
• Forests and woodland up to 75% of their value, as well as shares in forestry communities. However, shares in forestry investment plans are not included.

What deductions can be made?

There are deductions from any property related debt which is payable by the taxpayer on January 1 of the taxation year, including:

• ongoing property loans (up to the amount of the remaining due capital).
• costs related to property renovations, construction, reconstruction or enlargement works.
• taxes not yet paid on real estate properties, such as property tax. The housing tax is not deductible.

See Leggett Immobillier for more useful information about buying and selling property in France and a huge range of properties for sale.

This information does not constitute any form of advice or recommendation by Leggett Immobilier and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Appropriate independent advice should be obtained before making any such decision. Information provided by the Notaires de France.

The post Useful guide to French Wealth Tax appeared first on The Good Life France.

Were you born in the USA? Do you own a US passport? Have you lived in the USA? Have you worked in the USA? If you answer yes to any or all of these questions, it is highly likely you are a US Connected person.

Jennie Poate at Beacon Global Wealth explains what US Connected persons in France need to know and what help is available.

Issues Facing US Connected Persons

The investment and retirement planning needs of US connected persons are complex,  multifaceted and need special care, review and planning from a team of expert and joined up advisers. This includes finance, tax and investment specialists.

What FATCA Means

Since the implementation of FATCA in 2014 (Foreign Account Tax Compliance Act), sourcing retirement and investment solutions for US Connected Persons has become increasingly problematic. This is because most investment solutions in many countries do not comply with US tax law. You may have noticed the number of banks and financial institutions who no longer deal with US connected persons. You may even have been affected.

The problem is as simple as opening your US passport then looking at item D on the inside cover which reads: “All US citizens working and residing abroad are required to file and report on their worldwide income”.

More than $1trillion is held by over 10 million US persons outside the USA. Many don’t even realise they need to file compliant US tax returns. If your affairs are not structured correctly and if you do not report ALL income, including investment income, correctly you will be in breach of US tax law and have the IRS to deal with.

How to hold your Assets

Many investment options available in Europe to US Connected Persons will automatically put them in contravention of the US tax regime. For instance, one of the more tax efficient options in France of an Assurance Vie creates some very serious taxation issues in the US and may result in severe financial costs.

But you don’t need to lose sleep over this issue. There are solutions for US Connected Persons using fully regulated Securities and Exchange Commission (SEC) investment managers and partners. These solutions provide well priced, US and Current Country tax compliant and flexible options to assist with US tax reporting requirements and investment goals.

Investment Options

You should start with an in-depth meeting to ascertain your investment goals and objectives and build a portfolio of assets that meets your exact criteria and can cover the whole spectrum of risk. We work with leading fund managers we trust because of their consistent long term risk graded investment performance, US compliant investment models, SEC regulation and IRS tax reporting. All vital to help you achieve your financial goals and objectives.

Reporting to the IRS

The IRS requires annual returns – in the official IRS format. Our investment and platform partners provide everything you need to be compliant. It’s a simple and easy solution to a complex and potentially life changing problem. They can also pass this information direct to the IRS saving your time and effort.

More Complex Situations

Tax can sometimes be complicated and confusing. Our top tax firms and lawyer partners will help unravel any issues or even glitches that may have occurred over many years. They understand both US and current country issues.

Retirement Planning

Though it’s possible for non-resident US Connected Persons to fund domestic US pensions, there are a number of issues which mostly revolve around the tax treatment for those in this group.

But there are ways to resolve this problem and be compliant and tax efficient, even if you one day return to the USA. There are some differences in pension solutions – for instance one solution offers no upper limit to pension contributions and may be accessed from the age of 50, unlike pensions in the USA. This structure also offers greater scope for making significant pension contributions and benefitting from Tax-free growth.

An annual accounting statement will be produced for your US tax filing (Forms 8938 and FBAR need to be filed) keeping you fully compliant with US tax laws.

Returning to the US

It’s really important that your pension and/or investment can be transferred should you wish to return to the US. So make sure the investment managers you work with are all SEC regulated (as all ours are) and have US qualified advisers (as we do) so that should you need to, you can transfer your assets problem-free.

If you would like a no-obligation, free consultation about your financial situation, contact Jennie Poate, Head of Operations:

www.beaconglobalwealth.com; jennie @ bgwealthmanagement.net

The information on these pages based on current regulations is intended only as an introduction only and is not designed to offer solutions or advice. Beacon Global Wealth management are not tax advisors or accountants. Beacon Global Wealth Management can accept no responsibility whatsoever for losses incurred by acting on the information on this page.

The financial advisers trading under Beacon Wealth Management are members of Nexus Global (IFA Network). Nexus Global is a division within Blacktower Financial Management (International) Limited (BFMI).All approved individual members of Nexus Global are Appointed Representatives of BFMI. BFMI is licenced and regulated by the Gibraltar Financial Services Commission and bound by their rules under licence number FSC00805B

The post Finance info for US Connected Persons in France appeared first on The Good Life France.

You must know the rules when it comes to paying tax in France says Jennie Poate, advisor at Beacon Global Wealth…

Declaring your bank account details in France

If you are tax resident in France, each year you must declare your bank accounts, investment policies and insurance contracts to the French tax authority.

You are obligated to declare every account that was opened, closed or used during the year. This includes ‘Assurance Vie’ policies which are not based in France, including Luxembourg and Eire.

The requirement doesn’t include accounts used to make payments for online purchases or deposits relating to sales of goods that are less than €10,000 a year for all accounts combined.

Penalties of up to €1500 per year per account may be given, and even taxation of presumed earnings of 40%. If you haven’t declared in the past then it is best to contact the tax office directly either through your online portal or at the tax office and explain that you made an error. Recently penalties have been more frequent due to information sharing between tax jurisdictions. If you have any doubt at all – check with your tax office!

A useful link in English explains your obligations and there is a specific CERFA form 3916 which you can download from the French Impot website:

impots.gouv.fr/portail/international-particulier/questions/declaring-foreign-bank-accounts-and-life-insurance-policies-held?

If you would like a no-obligation, free consultation about your financial situation contact Jennie Poate, Head of Operations

www.beaconglobalwealth.com; jennie @ bgwealthmanagement.net

The information on these pages based on current regulations is intended only as an introduction only and is not designed to offer solutions or advice. Beacon Global Wealth management are not tax advisors or accountants. Beacon Global Wealth Management can accept no responsibility whatsoever for losses incurred by acting on the information on this page.

The financial advisers trading under Beacon Wealth Management are members of Nexus Global (IFA Network). Nexus Global is a division within Blacktower Financial Management (International) Limited (BFMI).All approved individual members of Nexus Global are Appointed Representatives of BFMI. BFMI is licenced and regulated by the Gibraltar Financial Services Commission and bound by their rules under licence number FSC00805B

The post Tax in France | Declaring your non-French bank accounts appeared first on The Good Life France.

Avis d’Impot is basically income tax in France. All tax residents of France are required to complete a form for the Avis d’Impot which includes reported income and the requirement for the date of submission may change. A general calendar of dates for tax notices is available online as well as by mail.

 Understanding your tax return reply form ‘Avis D’Impot’

For the vast majority of income tax notices, the deadline for Payment of the tax balance is September 15 for the previous year’s income.

The form you need to submit will generally need filing by May and this lists the income you receive, and the deduction of allowances – leaving you with a net figure to pay if required.

In 2019 ‘PAS’ – Prélèvement à la source – has been introduced whereby the authorities began to implement a ‘pay as you earn’ system.

French tax is calculated on a parts system so in this example below, you can see that the ‘nombre de parts’ is 2, meaning 2 adults. If you have children they also have ‘parts’ to contribute which differs according to the number of children. Further allowances are available for those who are disabled or over 65.

A brief explanation is as follows:

• This shows income earned by each individual which may be salary, pension or rental income.
• This corresponds to ‘PFU’ known as flat tax or Prélèvement Forfaitaire Unique which is tax payable on all investment income.
• This is the gross amount of tax before any allowances are input.
• These are the reductions netting down your taxable income.
• Revenue fiscal de reference. This is a measure of the household’s resources and makes it possible to obtain, for example, social benefits or certain tax exemptions for those over 65.
• This shows a person who has a régime micro enterprise where tax is payable quarterly on declarations.

If you think there has been an error made on your tax return you normally have until mid-December to make a correction. Generally, tax experts will tell you to pay the tax owed first and then ask for a correction rather than run the risk of a fine for non-payment. If you have any doubts whatsoever, then you should consult a tax professional.

Video about your Avis d’Impot

You can read more about the Avis d’Impot on the Impots.gouv.fr website (French only).

Jennie Poate is a qualified and authorised financial adviser, working for Beacon Global Wealth Management. She is happy to answer any queries you may have by telephone or email and she and her team would be delighted to help you with any pension or investment queries.

Please note, we are not tax advisors and the above is just a sample tax return for illustration purposes only. We cannot be held responsible for any person who acts upon the information provided in this article.

Jennie can be contacted at: jennie @ bgwealthmanagement.net; Tel: France 0033634119518; www.beaconglobalwealth.com for information and factsheets

The information on this page is intended only as an introduction only and is not designed to offer solutions or advice. Beacon Global Wealth Management can accept no responsibility whatsoever for losses incurred by acting on the information on this page.

The financial advisers trading under Beacon Wealth Management are members of Nexus Global (IFA Network). Nexus Global is a division within Blacktower Financial Management (International) Limited (BFMI). All approved individual members of Nexus Global are Appointed Representatives of BFMI. BFMI is licensed and regulated by the Gibraltar Financial Services Commission and bound by their rules under licence number FSC00805B. The financial advisers trading under Beacon Wealth Management are members of Nexus Global (IFA Network). Nexus Global is a division within Blacktower Financial Management (International) Limited (BFMI). All approved individual members of Nexus Global are Appointed Representatives of BFMI. BFMI is licensed and regulated by the Gibraltar Financial Services Commission and bound by their rules under licence number FSC00805B.

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If your main home/principal residence is in France and you are a tax resident in France it is a legal obligation that you declare all your world/global income and annual capital gains to the French tax authorities. It’s irrelevant if gains are made outside of France. For example if you have moved to France from say the UK, and you sell your UK property at a later date, any capital gains (if any are made) must be declared in France. Since 05 April 2015 the UK rules have changed and the primary taxing right now vests with the UK and you will pay tax in both countries

Even if your UK home was your family home when you resided in the UK, when you moved to France your property in France is classified as your family home. If you have retained your UK property then this becomes a secondary residence and subject to CGT if you sell it.

Capital Gains tax on properties are applied as two separate taxes. The rates for 2019 are as follows:

Capital Gains Tax in France

The basic rate of capital gains tax is 19%.

Tapered relief against the tax is granted over 22 years of ownership, commencing from the 6th year of ownership, as follows:

• No allowance for the first 5 years of ownership.
• Between 6 and 21 years of ownership: 6% allowance per year.
• For the final 22nd year of ownership: 4% allowance.

This means that a property owned for 10 years would be granted a 30% discount on the tax, and one held for 15 years would be granted a 60% discount.

Social Charges (Prélèvements Sociaux)

Since 2018 the standard rate of social charges is 17.2%, applied in addition to the main CGT tax itself.

In the same manner as capital gains tax, tapered relief is granted, but over a longer period of 30 years, commencing from the 6th year of ownership, as follows:

• No allowance for the first 5 years of ownership.
• Between 6 and 21 years of ownership: 1.65% per year.
• For the 22nd year of ownership: 1.60% in this single year.
• Between the 23rd year to 30th year of ownership: 9% per year.

The effect is that on a property owned for 10 year a discount of 8.25% on the social charges is granted. At 15 years, the discount would be 16.5%.

Note that: as a result of a change of law in 2019, social charges on people resident in France holding an S1 certificate of health exemption (or similar) were abolished and replaced by a ‘solidarity tax’ (prélèvement de solidarité) at the rate of 7.5%. That gives a combined total rate before allowances of 26.5% for the two taxes.

This change also applies to non-residents living in the EEA who sell their French property, e.g. second homeowners.

You are granted an allowance based on the duration of your ownership of the property, as well as allowances for eligible costs. The allowances for the duration of your ownership is below:

Former French Residents

Since January 2019, former residents of France have been put in much the same position as residents, with the right to obtain exemption from capital gains tax on the sale of their former principal home.

Under the new rule, a non-resident who sells a property that was their main residence can obtain complete exemption from capital gains tax on the double condition:

• that this transfer be made no later than 31 December of the year following in which the seller moves their tax domicile outside France;
• and that the property has not been made available to third parties, free of charge or against payment, between the relocation and the sale.

The exemption applies irrespective of nationality or country of residence.

In the case of former residents of the UK resident in France a tax treaty signed between France and UK, operative from 1st January 2010, makes you liable for capital gains in France on the future sale of your former home. However the UK changed it tax laws regarding CGT and France for private properties 05 April 2015 and for commercial properties 5 April 2018, the UK now retains primary taxing rights.

Should there be a French charge you will be entitled to the same relief on French capital gains tax as you would otherwise receive if the property was located in France. On that basis you will be entitled to relief based on the duration of ownership, and a credit for any tax paid in the UK.

The 2010 treaty overturns a previous rule in which there was an exemption from capital gains tax by the UK tax authorities on the disposal of the main residence for a period of five years, and which was also exempt from capital gains tax in France.

In addition, since 2015, the UK has also imposed capital gains tax on the sale of property of former residents, although only any gain since April 2015 if the correct declarations are made within specific time limits of the sale, and the final 18 months of ownership normally qualifies for relief. A tax-free allowance of £11,700 (2018/19) also applies. Individuals will pay at the rate of 18% or 28% on net gain, depending on their UK income tax bracket, if you have UK income

Written by Paul Flintham, International Financial Adviser, Beacon Global Wealth Management

Email: paul @ bgwealthmanagement.net; beaconglobalwealth.com

The information on this page is intended as an introduction only and is not designed to offer solutions or advice. Beacon Global Wealth Management can accept no responsibility whatsoever for losses incurred by acting on the information on this page. Beacon Global Wealth Management are not tax advisers, professional tax advice must be sought.

The financial advisers trading under Beacon Global Wealth Management are members of Nexus Global (IFA Network). Nexus Global is a division of Blacktower Financial Management (International) Limited (BFMI). All approved individual members of Nexus Global are Appointed Representatives of BFMI. BFMI is licenced and regulated by the Gibraltar Financial Services Commission (FSC) and bound by the rules under licence number FSC00805B. Beacon Global Wealth Management are members of FEIFA (the) Federation of European Independent Financial Advisers: https://feifa.eu/

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