Whether you are buying a property in France for a permanent move or as an investment, you need to consider the tax implications before you sign on the dotted line.
By being aware of your options and putting the right safe-guards in place you can enjoy your property without any nasty surprises for either you or your business.
For an EU resident, relocating to France and registering a new business is relatively simple. All you will need to do is take your passport, birth certificate and proof of address to the Chambre de Commerce, answer a few questions about the kind of business you plan to run, and pay €83. In return, you will be assigned the official SIREN and SIRET reference numbers to quote on your invoices, and your details will be automatically sent to the tax and social security offices.
Holly Clift-Matthews, from Cheesmans Accountants, suggests there are three questions you must ask your accountant before purchasing your French property.
1. Will my Residence status change?
This is important to understand as it can affect how much tax you pay and where you pay it. If you are UK domiciled, then you will pay UK tax on your worldwide income. You will pay French tax on your worldwide income if you are resident in France.
2. I’m buying a property to let; what tax will I need to pay?
You will need to complete a French Tax Return as well a UK Tax Return if you remain resident in the UK and you will be liable for any rental income or Capital Gains Tax. There is an annual wealth tax payable in France but if you are resident in the UK, then it only applies to French assets.
3. Are French Inheritance Tax laws different?
Unlike the UK, where we can freely distribute our assets as we like upon the writing of a will, in France it is very different. There is a strict order in which assets are passed – and it’s not very beneficial to the surviving spouse! It’s therefore important to seek legal advice to ensure you are protected.
There is some good news; Inheritance Tax (IHT) in France is progressive and reviewed each tax year. There is a double tax treaty between the UK and France, which means that you will not have to pay IHT twice.