One of the biggest challenges that expatriates face when moving to and living in France is the complexity of expat finances and this can be especially true in France with the complex inheritance and tax rules. Add to this problems with understanding language and it can soon become difficult to know where to turn.
Many expats don’t consider all aspects of their finances before, during and after moving abroad. This makes organising their financial affairs even more difficult than it needs to be. Here are some points to consider:
- Living within your means
The excitement of starting a life in a new location, integrating with the local culture, building or renovating a new home (always unforeseen expenses) and making new friends can affect your spending behaviour. How far does your income/investments go to cover this lifestyle? Are you planning far enough ahead?
- Banking: local or overseas?
It is of course imperative that you open a local bank account in your new country of residence to assist with your day-to-day financial needs. What other needs do you have and what products are suitable to keep your savings and investments tax efficient for you now you are in France? (Assurance Vie as an example).
Should I maintain accounts in my home country or consider alternative locations? It’s important to get this part right to ensure you are aligning everything in a tax effective manner and getting the best service/returns for your money.
- Are you getting your tax right?
Many expats forget to inform their home country’s tax agency of their decision to move abroad, thus failing to change their tax status. In the UK, aspiring expats should inform HM Revenue and Customs (HMRC) of their intention to move abroad and submit a completed P85 form. This is crucial for expats to ensure that they will not be sought after for tax, claim tax relief or any tax refund they are owed and become non-UK resident to avoid tax on certain incomes.
- Research the laws of inheritance in the country you are moving to
Every country has its own way of taxing people’s wealth after they have left this world. Leaving the UK, contacting HMRC and completing the P85 form does not remove your Inheritance Tax liability to the UK; but on top of this you are likely to have a liability on the assets you hold in the country where you now reside and this is certainly true in France, potentially up to 60% Inheritance Tax liability. Careful financial planning is required to ensure that you get to leave your wealth to your loved ones in the most tax efficient way possible.
- Don’t neglect your pensions
Next you would be advised to review your pensions; we have all been educated over our working careers that we must set aside monies to be able to live a comfortable life in retirement. So what should you do with what has been accumulated? What options outside of the UK could have advantages such as QROPS etc.
- Get the services of unregulated financial planners
One mistake expats make is believing that their financial adviser is regulated in their new country of residence. You need to ask the question and complete your own due diligence; the Internet is a great place to start. If your financial adviser is regulated appropriately then you should be able to see this via the countries regulator; i.e. the Financial Conduct Authority in the UK or the Financial Services Commission in Gibraltar – this is not sufficient in itself if you live in a country outside of these – the Financial Adviser must have the relevant ‘Passporting’ permissions to provide advice in your country of residence – again this information should be well documented on the Regulator’s website.
- Avoid poor investment choices
Making poor investment choices is, to some extent, relevant to the previous mistake, which is getting the services of unregulated advisers, especially in countries with lax policies on regulation, but you are not stuck with these and that is why a review with a qualified adviser can help.
In these testing times, getting advice from a financial advice company that has weathered more than one or two financial downturns is essential for your financial wellbeing and peace of mind. Blacktower Financial Management has been established for over 32 years and has worked with its clients through good and the bad times, offering sound financial advice.
The above information was correct at the time of preparation and does not constitute investment advice and you should seek advice from a professional adviser before embarking on any financial planning activity.
Blacktower Financial Management Ltd is authorised and regulated in the UK by the Financial Conduct Authority. Blacktower Financial Management (Int) Ltd is licensed in Gibraltar by the Financial Services Commission (FSC) through whom we have a registered branch and passport for financial services in France. License number 00805B.