With early and careful planning, you can make the most of tax-efficient opportunities when moving to France.
Once legal residence is gained, you also need to understand the financial implications. Tax and succession rules on your worldwide income and assets will apply. You will also have to review whether your existing investments and pensions are still suitable.
If you get it right from the start things will be easier, so do your research and take professional advice as soon as possible. There are usually steps you can take to improve your tax and estate planning even if you already live in France.
1. Your tax
The French tax regime is completely different to the UK’s.
If your main home is in France you are considered resident for tax purposes. This also applies if it is your principal abode, or your main activity or economic interests are in France.
Income tax rates can be up to 45%, and you face additional social charges on most income, with rates generally between 9.1% and 17.2%. If your property portfolio exceeds €1.3 million you may face an annual wealth tax.
But there are financial planning measures you can take to make for better tax-efficiency.
2. Your UK assets
Tax liabilities can be lowered if you know when to sell your UK assets.
If you sell your main home or put it on sale while still UK resident, it escapes French tax, but if sold after a year of living in France it will be taxed as a second home in France. Selling a second home in the UK always attracts UK capital gains tax, but it can be tax-free in France if you have owned it for 30 years.
The 25% tax-free pension lump sum that can be taken in the UK does not apply in France, where you would pay income taxes on it. But if you cash-in your entire pension, French tax rates can be as low as 7.5%, plus social charges where applicable, in some circumstances.
3. Your estate
In France, succession law and taxes differ greatly from the UK’s. ‘Forced heirship’ rules will automatically distribute up to 75% of your estate to your children. You can elect for the relevant UK law to apply to your estate instead, but take advice first. French succession taxes can be as high as 60% if you leave assets to step-children or non-relatives.
Good estate planning should be a key part of your strategy to become French resident to help ensure your legacy will end up in the right hands at the right time, with as little tax as possible.
4. Your money
You need to ask if your savings and investments are suitable for your life in France? Are you holding the right spread of assets to meet your objectives, time horizon and risk tolerance? Should you hold more savings in Euros now? For peace of mind, obtain an objective analysis of your risk profile, then ensure the mix of assets in your portfolio is suitable for your needs.
If you are retired you should also review your pension funds and the options now available. Can you maximise your retirement savings without unnecessary risk? Should you move your pension out of the UK? If you are considering a Qualifying Recognised Overseas Pension Scheme (QROPS), remember the UK could extend its 25% ‘overseas transfer charge’ in future, now it has shed its EU obligations.
It pays to take the time to ensure your tax and wealth management are in the best possible position for your life in France. Specialist professional advice will prove invaluable.
Trusted Help and Advice for Your Move to France
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 10 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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