Charlotte Macdonald is a consultant associate solicitor in Stone King’s international and cross-border team.
Charlotte answers legal and practical questions that are often asked by her clients in relation to France, whether that be buying or selling property in France, inheritance law, or how inheritance and capital gains tax are treated between the UK and France.
Brexit has now happened, and a year has passed since the free movement of people, goods and services between the UK and EU came to an end. What has this meant from a legal point of view for British citizens either living or owning property in France?
Owning Property in France
As non-EU citizens, it is still possible for British people to buy and own real estate in France. As in the pre-2021 days, it is possible to rent the property out or stay in it yourself.
The main difference for British people is that we need to be aware of the 90-day rule. If staying in the EU (more specifically the Schengen area countries) for less than 90 days in any 180-day period, then there is currently no need for a visa.
For those who don’t live in France and wish to sell their property in France, it is now generally necessary to instruct a French Fiscal Representative to ensure that you are paying the correct taxes in France on the sale. The cost of this is not regulated but can be up to 1% of the sale price.
Under the EU Succession Regulation, you are still able to make a will electing for ‘British law’ to apply to your property in France.
It is important, however, to note that due to changes to Article 913 of the French Civil Code, which came into force in November 2021, the effectiveness of an election for British law may now be limited in some circumstances.
If you live in the EU or are a citizen of an EU country, or if any of your children are EU residents or nationals, the French forced heirship rules can be enforced over your assets in France if your children wish.
Broadly speaking, the French forced heirship rules mean that if you have children, on your death, you must leave a proportion of your assets to them. You cannot leave all your assets to your spouse or disinherit a child. If the changes to Article 913 apply to your circumstances, if your children wish for French forced heirship rules to apply, they can overrule the election in your will for British law to apply.
If you haven’t already reviewed your wills in light of the new changes, it would be sensible to discuss the changes with your solicitor. Your wills may no longer work as they were designed to.
Inheritance tax, income tax and capital gains tax are all dealt with under British/French double taxation agreements (as opposed to EU taxation agreements), so, for the most part, they remain unchanged.
However, there are changes to the social charges on selling a property. When the UK was a member of the EU, it was possible to take advantage of an EU rule which meant that British resident individuals could pay a lower rate of social charge. This is no longer available, and the full rate is now payable.
For more information, please contact Charlotte Macdonald, Dan Harris, Raquel Ugalde or Emma Seaton at Stone King LLP by calling +44(0)1225 337599 or by emailing: [email protected].
Article written by Charlotte Macdonald and trainee solicitor Bryony Anning.
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