Few people enjoy tax planning, but they do enjoy the positive results it can achieve. It’s worth spending some time reviewing your financial planning to see if you’re holding your assets in the most tax-efficient way for France.
This is even more important if you haven’t carried out a review since you moved to France. Here are some of the benefits of tax planning.
1. Reducing Your French Tax Bill
As a resident of France, you are liable to income tax, social charges (another tax on income), capital gains tax and an annual property wealth tax, all on your worldwide assets. Added together, your total tax bill can be rather daunting.
The good news is that there may be more tax-efficient ways of holding capital and assets to improve your situation, sometimes considerably so.
The French tax regime is very different to the UK’s, and what was tax-efficient there is unlikely to be in France. For instance, income and gains derived from ISAs and Premium Bonds prizes are tax-free in the UK but fully taxable in France.
By holding onto UK investments, you could be missing out on alternative structures available in France that can reduce your tax liability as well as providing many other potential benefits, such as currency flexibility.
2. Maximise Real Returns
Effective tax planning plays a part in helping returns outpace the cost of living. What counts when assessing the value of investments are ‘real’ returns – after tax, expenses and inflation are taken into account.
With investments, the starting point should always be making sure your portfolio is well diversified and designed to suit your situation, needs, goals, time horizon and risk tolerance. But without suitable tax planning, returns can be diminished by taxes that could have been avoided or significantly reduced, so this is important too.
3. Reducing the Tax Bill for Your Heirs
The less tax you pay in your lifetime, the more you have to either spend now or pass on to your family and heirs.
France’s inheritance tax – ‘succession tax’ – is charged on each beneficiary, with the tax rates and allowances varying considerably depending on who the beneficiary is. With some investment structures, you may also be able to lower this tax liability for your heirs. For example, assurance-vie can be highly tax-efficient for estate planning purposes. It’s a solution that can limit inheritance taxes while also providing tax-efficient income and investment growth throughout your lifetime.
4. Flexible Estate Planning
Besides lowering taxation, strategic tax planning can make things easier for your family when you are gone.
France imposes ‘forced heirship’, but some investments arrangements that provide tax efficiency also offer more estate planning flexibility and control.
Some UK pensions are only transferable to your spouse on death. But if the pension monies are transferred to a Qualifying Recognised Overseas Pension Scheme (QROPS) or reinvested in a suitable tax-efficient structure for France, you could pass funds on to other chosen beneficiaries, often without the need to go through probate.
Getting Your Tax Planning Right
The French tax regime is complex and can change regularly. It’s even more complicated for expatriates who have to take the rules of more than one country into account.
For the best results, talk to an adviser with in-depth understanding of cross-border taxation, including how French taxation interacts with UK rules. They can ensure your financial planning meets your income needs and goals in the most tax-efficient way, for yourself today and your heirs in the future.
Blevins Franks are experts at helping British expatriates make the most of their wealth in the most tax-efficient way possible. We provide integrated, cross-border advice on tax planning, estate planning, investments and UK pensions. Our overriding aim is to give you peace of mind that your financial affairs are in order, for today and the future, for yourself and your family and heirs. We can also guide you through the new residence rules post-Brexit. We have ten offices across France and our advisers would be happy to discuss your plans to move to France and how we can help.
+44 (0)20 7389 8133
Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices, which are subject to change. Tax information has been summarised; individuals should seek personalised advice.
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