For Americans who are expats in France (or anywhere), tax reporting requirements are something you don’t leave behind when you move to a new country. U.S filing requirements go with you – wherever you go. And not just that, there are additional tax reporting requirements known as FATCA and FBAR. We asked Douglas Soons and Amy Witherbee, the experts at Sanderling Expat Advisors who specialise in helping Americans in France to deal with their finance and taxation requirements to explain more…

What is the FATCA

FATCA means Foreign Account Tax Compliance Act. To summarise it’s an IRS requirement that you give notice of any financial assets you hold outside of the U.S. You’ll need to complete a form Form 8938 and submit it when you file your regular income tax return. This only applies to individuals, and you must file if you are living abroad and all of your foreign-held assets combined total more than $200k on the last day of the tax year OR more than $300k at any time during the year. If you’re filing jointly as a married couple that amount changes $400k and $600k. It also affects those living in the US with assets abroad.

What is the FBAR

FBAR means Foreign Bank and Financial Accounts. Yes, at first glance it can seem similar to the FATCA – but it’s not. This one is about money laundering, or rather the prevention of money laundering. And, even if you don’t meet the asset thresholds for the FBAR, you might be required to file an FBAR. Unlike the FBAR, you don’t file it with your tax return but file through a different system – BSA-E Filing system. Technically it must be filed by April, but the government gives everyone an automatic extension to October 15th. Once that is done, you file your U.S. returns, taking a credit for your French taxes by taking advantage of the other IRS automatic extension, this one for U.S. expats filing their regular U.S. returns.

If you’re already reporting everything on a FATCA consolidated reporting, you do not need to file an FBAR notice, too. If you’re not filing through the FACTA notice, and you had more than $10k at any time during the year combined across foreign accounts (including PayPal), or your listed as a signatory on someone else’s account, you need to file an FBAR. This applies not just to individuals but to corporations etc.

You’ll need to deal with foreign exchange rates, file on time, and keep on top of those filing requirements in order to avoid issues.

French tax for US expats in France

We haven’t even mentioned filing your French tax returns yet – but yes, that needs to be done too. Even if you receive income from the US – for instance fees, dividends, that too needs to be reported – in France. You won’t pay tax on all of it as the US and France have a double taxation treaty in place, and in fact you may even find that there are ways to mitigate tax.

If you’d like guidance and help with any aspect of finance and tax as Americans in France, whether filing for American taxes, French taxes, or both – feel free to get in touch with Sanderling Expat Advisors at: sanderlingexpat.com

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Nothing great ever came easy a wise person once said. And when it comes to being an American living in France, dealing with your tax, reporting requirements, and knowing how to manage finances to suit US IRS rules, is essential to making life great. Get it wrong, and you’ll sure know about it. Luckily there is help and plenty of support to make sure you get it right and live the good life in France that you planned.

Whatever stage you’re at – moving to, living in, or returning from France, you need to bear in mind “citizenship-based taxation” because if you’re an American, you must still file tax returns in the US. It doesn’t matter how long you’ve lived in France (or anywhere else), the IRS rules apply. And it’s not just about filing tax, you’re also restricted in the types of investments you can hold and that includes certain pension and life insurance vehicles. And some investment vehicles may seem like a great idea but may not provide the details the IRS require, making them unsuitable for Americas, for instance the Assurance Vie.

Add to that mix the complications of French financial systems and investment vehicles and says Amy Witherbee of Sanderling Expat Advisors “you have the makings of a mess. But it doesn’t need to be painful, as professional tax and investment advisors specialising in helping American expats in France with their finances, we will make sure that everything is sorted out, reports are filed correctly and all the paperwork is taken care of.”

Moving to France

If you’re at the stage where you’re considering moving to France, Sanderling Expat Advisors say this is an ideal time to get everything in order with your finances so that when you arrive, you know that’s one worry you don’t have on your plate. Instead you can focus your energies on creating the life you dreamed of.

“Before leaving the U.S. for France, we help by developing a list of documents the client will need to report assets, open accounts etc. in France,” says Douglas Soons of Sanderling Expat Advisors. “Crucially for us Americans, we also help clients make adjustments to their U.S. investment accounts before their new EU-based status makes certain holdings (i.e. mutual funds) become a tax problem. And again, there is a question of how the sale of a home, or investment assets might be treated before certain deadlines vs. others. For instance, if you know you are going to have capital gains on a home sale at closing, you want to be sure in advance that the timing of that sale gives you the benefit of a primary home tax break (before you move and make your primary home into a secondary one).

Likewise, if you will need to take money out of your U.S. investment account (i.e. to buy a property in France), you might want to do that sooner, rather than later, so that you are reporting that only on American tax returns.”

Living in France

Already living in France? It’s absolutely not too late to get things sorted out. Get help to create and manage the reporting requirements that you are by law required to undertake under US financial rules. We won’t go into too much detail here but just as an example – FBARs and FATCAs. Or to give them their full names – FATCA: Foreign Account Tax Compliance Act, basically an IRS requirement to provide details of financial assets held outside of the US. FBAR: Foreign Bank and Financial Accounts – like a FATCA but filed on a different system. If you’d like to read more about the requirements, who has to do this, how, what, where and when to file, read Sanderlings Expat Advisors FATCA and FBAR jargon-free explanation here.

And when it comes to filing returns in the French system, Sanderling Expat Advisors can also help you with that.

Moving back to the U.S. from France

As you can imagine, it’s not just a question of packing up your belongings, shipping them back and hopping on a plane. Sort out the financial requirements before you leave to help for a smooth move.

“Before returning to the U.S. we recommend people identify what reports, filings and taxes will be due to each country during the next 12 months. This helps us create a checklist of deadlines for the client and pull together what they will need to submit. But it also helps us determine whether the client is better off to close certain accounts, move assets, etc. before particular deadlines, i.e. the end of a tax year. Or if certain accounts, like the PEA, (a French investment vehicle) for instance, might need to stay in place a while longer to avoid punitive taxes.”

Find out more and book your consultation with one of the qualified cross border financial and tax advisers at Sanderling Expat Advisors: sanderlingexpat.com

The post Essential tax and finance guide for U.S. Expats in France appeared first on The Good Life France.

Succession law is probably one of the most contentious rules for the British moving to France, as it seemingly infringes on our right to leave our money to whoever we choose.  We asked Robert Kent at Kentingtons, the professional tax and financial advisors in France for British expats, to explain succession law and it’s potential problems.

What is succession law in France?

France uses Napoleonic law that ensures that the family is protected and that money from the parents should filter down to their children. Children are deemed “reserved heirs” and must inherit a percentage of their parent’s estate on their death. This law forms part of the French constitution, and these rules have significant importance and can be difficult to get around, although there are ways to do it.

Succession law is especially problematic for those with children from a former marriage, with the stepparent being left to battle with their stepchildren to hold onto the house and home.

What are the rules for inheritance for children in France

The amount of the estate to be left to the children is as follows:

1 child = one-half of the estate
2 children = two-thirds of the estate
3 children = or more three-quarters of the estate

The remaining fraction is unreserved and may be left to anyone the donor pleases.

To be clear, it is only that part of the deceased’s estate. So if the deceased owned half the property and there was one child, it would be half of the half, therefore only a quarter. This means that in many cases, it does not give the child control of the property – but it is their right to demand their share on any sale.

Can I choose who I leave my money to in France?

For those who want to choose where their money goes, there are solutions. However, there is some planning involved. Ideally this would be done before buying property in France, but it isn’t too late to do it afterwards.

It is usually possible to leave the surviving partner the right of use or “usufruit” of a property. The “usufruitier” can live in the property and make any alterations they wish. They may even rent out the property. However, on the sale of the property, the children will generally have the right to their share.

If this isn’t what you want, then beware that a little information can be a dangerous thing. Sometimes people copy each other’s solutions, but this doesn’t always work. Generally there is a different solution for every situation.

The worst thing you can do is nothing. The only safety net for those who do nothing is the “right of living and right of use.” This literally means you have the right to use the property. You have no rights to do anything to the property, or even rent it out, without the children’s agreement.

Can I avoid the law of succession issues

It is possible to reduce or even eliminate succession and inheritance law issues in many cases using either legal or investment techniques or a combination of the two.

This article provides a basic understanding of the French rules. However, there are regular changes in European legislation. As Europeans and UK nationals, you may have the option to simply opt-out of French inheritance rules and request that UK rules apply to your assets instead. This can be achieved by merely amending your French Will to reflect your wishes. This law (EU 650/201) was passed on 4th July 2012 and came into effect on 17th August 2015. However this being France, it isn’t always as cut and dried as this, for instance if one of more children are EU residents, this may impact the ruling.

It is vitally important to understand that this law does nothing at all to avoid inheritance tax in France. You still need to plan for “Inheritance tax” as Brussels IV deals only with success law. Brussels IV will not help you avoid French inheritance tax rates which can be up to 60%. And it’s no good looking up information on the internet or asking friends, to be absolutely certain in this highly complicated aspect of succession and tax, professional advice is the best way to make sure you plan effectively.

By Robert Kent is a senior partner at Kentingtons, experts in French succession law. Kentingtons offer a no-cost, no-obligation discussion about individual situations. See their website for details: kentingtons.com

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

The post Guide to Succession Law in France appeared first on The Good Life France.

I always remember someone saying to me “I love France, but I have never spoken about dying quite so much as I do since I got here!” I knew just what they meant. Inheritance and succession law in France is complicated and is a frequent topic of conversation amongst expats. We asked Robert Kent at Kentingtons, the professional tax and financial advisors in France for British expats, to explain inheritance tax and the law known as Brussels IV…

Inheritance tax in France

Well, there are much more fun conversations so it’s a good idea to deal with the elephant in the room and move on. And talking about it with your friends doesn’t really help since everyone’s situation is different. So what is right for the person you are chatting with might not be a good solution for you. Their advice might lead you to disaster. I can tell you first hand, just how this can affect people’s lives after I helped the surviving spouse of a couple I served, with a very messy situation.

It can go very wrong

When we originally met, they stated that they had several children and their main objective was to protect the surviving spouse. They wanted their children to inherit their estate, but only when they had both finished with it. I suggested that they consider a change of marriage regime to communauté universelle (universal community) with a survival clause which would need to be discussed with a notaire, who would give legal guidance and draw up the contract.

A change to community meant that when one of them died, everything would automatically pass to the survivor, in full ownership, with nothing (yet) passing to their children, and with no accountability to them. Within a couple of weeks they sent me a copy of the act, confirming it had all been done.

The details are critical

Many years later, I was advised that sadly one of the couple had died.  But I was confident that all was well with their inheritance planning, or so I thought. Sadly, the couple had talked to friends about inheritance tax which led them to do something drastic without seeking professional advice or even informing their advisor (that would be me). They had been told by the friend that they should do a will using Brussels IV. The friend said it meant you can sidestep French succession law. This is true, but they interpreted it as treated under UK rules, meaning UK inheritance tax, in place of French inheritance tax – which is not the case.

Here is the big problem. They had instituted a marriage regime change which placed the joint assets into a community, which now was legally outside of the couple’s estate, leaving a UK will citing that UK law applied to the now empty estate.

If the marriage regime is universal, it usually covers the whole estate, though technically it is possible to exclude things. Normally assets are viewed as “biens propres” (cleanly owned). For the sake of sanity (I can see your eyes glazing over), let us say that everything is joint. As is common with marriage regimes, the contract said that it applied exclusively to “biens situés en France” (goods situated in France).

You can’t have it all ways

Generally speaking, UK assets that are not buildings, are treated as in France. This is  because the UK/France succession treaty states that only UK situated buildings are under UK rules, with the rest under French law. We now, however, have a conflict, because there is a UK will asking for UK law to apply, so how does that work? Spoiler alert, it does not! It’s a bit like buying two cars and then attempting to drive them both at the same time. It is simply not possible, since you can only sit in one car at a time. Had my clients left the marriage regime as the only solution, the only thing the survivor would need to provide to the notaire is a death certificate.

The technical legal reason for this is that the survivor is deemed to have always been the original owner, since they were part of the community and now there is only one person left, so it dissolves, assuming they are the full owner. The death certificate is merely to prove death, so the name can be removed, as there is no actual transfer of assets per se. My client was asked for a list of things covering several pages because the notaire needed to asses what was in the community, what was under UK law and needed evidence of each asset and value. It was a total mess. Had the client approached me or any suitable professional (one qualified and based in France) before doing a will under Brussels IV, they would have learned that they were better off as they were.

If they insisted on having Brussels IV, they should have redone their marriage regime, going back to separate estates to avoid any conflict. It can be done but it’s complicated – and expensive.

So when should I apply Brussels IV?

Brussels IV can be a good idea for some situations. If you have children from a former marriage, which makes a marriage regime change almost impossible, this can be a good option.  But every situation is different and every solution should reflect this.

You could of course go to law school and study French civil and fiscal law, UK inheritance law, Brussels IV (EU law), international tax treaties and the Hague Convention (international law). They make sure you have a good understanding as to how all these work together or conflict, so you can avoid any problems. You could take advice from someone who hasn’t done this but says they know how it all works. Or you could do nothing (this is a surprisingly popular option) and can leave a whole heap of problems for loved ones just when they don’t need them.

My advice? Get professional advice relevant to your situation.

By Robert Kent is a senior partner at Kentingtons, experts in French succession law. Kentingtons offer a no-cost, no-obligation discussion about individual situations. See their website for details: kentingtons.com

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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

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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

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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

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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.