Moving to a foreign country entails a lot more change than simply adapting to a new language.
France is no different, and being prepared for some of the fiscal differences can help you avoid feeling a fool when it comes to keeping your money safe.
Our many years of experience have alerted us to the fact that people moving here often make the same ‘mistakes’.
What follows is a straightforward list of dos and don’ts to guide you through some of these potential pitfalls.
1. Prepare before you move to France
First of all, don’t move to France without organising your financial affairs in advance.
Pick the brains of a financial adviser who is qualified and regulated over here beforehand.
It is important to maximise the tax benefits of your country of origin and France. What is tax-efficient in the UK, for example, will not necessarily work in France.
Indeed, the majority of UK investment vehicles are not recognised here at all.
Nevertheless, as in the UK, in France there are ways to mitigate tax.
If you become a French resident, you will be assessable for taxes on your worldwide assets: thus, it is important to ascertain the costs and implications, as well as to consider potential alternatives, before moving.
Such knowledge will provide peace of mind, and hopefully offer a clear path forward.
2. Succession and inheritance
Don’t close your eyes to French succession law. Inheritance law here can seem quite daunting and rigid, but there are solutions to, at the very least, mitigate potential issues
3. Get clear on residency timings
Don’t forget that the UK-France double tax treaty overrules HMRC residency rules, and do make sure you are clear on these residency rules.
For example, the following is a relatively common misconception: a couple move from the UK to France and, after six months, they decide to stay.
They think they are French tax residents from the period after six months, whereas in reality residency will start from their original date of arrival in France.
As an aside, it is important to note that this kind of ‘unplanned’ residency means the couple will almost certainly lose the means to structure their finances in the most tax-efficient manner, having lost their UK tax-residency six months prior.
4. Shop around for best money transfer rates
Don’t use a traditional high street bank for currency transfers, but rather a specialist currency transfer company. The reason is simple: high street banks typically have significantly higher charges.
5. Don’t put all investment into property
Don’t simply assume that property is a safe investment. Instead, ask yourself what will happen to property if/as interest rates rise, or if your tenant does not pay rent.
Do not get me wrong, property can be a very good investment as part of a balanced estate. Like all good investments, it comes through over the long term, but people tend to forget that property, too, has its ups and downs, as well as administrative headaches.
6. Don’t panic sell shares
Don’t panic sell when stock markets are down and the media are promoting doom and gloom.
Do know your risk tolerance levels before taking on any market-based investments.
Today, we know that returns on cash are, at best, extremely poor and inflation is likely to mean that real returns are actually negative.
It is, therefore, logical to consider taking on some market-based investments. However, any such risk should be both reasonable and measured.
When compiling this advice, we realised there were enough pointers to fill a very significant book.
These, however, are the issues that come up most often. What is abundantly clear is the need for careful planning and professional counsel.