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The truth about French tax residency – forget preconceived ideas

Partner article: Christopher Davenport from Kentingtons explores the main fears that stop people becoming French residents

For those sitting on the fence, let us explore why you might wish to become a French resident Pic: Art_Photo / Shutterstock

Over the years, but particularly since Brexit, we have met a number of people who are prepared to bend all sorts of rules to avoid becoming French-resident.

This is despite the fact that they would prefer to spend most of their time in France, or at least have the flexibility to spend more than three months at a time if dividing their lives between the UK and France.  

Fear of the unknown is undoubtedly a factor, augmented by fear of what one thinks one knows. 

Let us just say there are numerous clichés about France, some of which are true. Many, however, are not, and others, while partially true, are often blown out of all proportion. 

So for those sitting on the fence, particularly those with preconceived ideas, let us explore why you might wish to become a French resident.

1. Stay longer 

We will start with one purely practical reason for changing tax residency.

You are no doubt aware that, as a UK resident, visits to France without a visa are now limited to three months. 

This rule has made things especially problematic for second-home owners in France, who before Brexit could come and go as they pleased.

Read more: How do we move from a visa to having a French carte de séjour?

But did you know that, as a French resident, a UK citizen can spend up to six months in the UK – continuously, should they so wish? 

This increased flexibility could make life much simpler for those with properties in both countries.

2. Tax might not be as high as you think

Returning to those preconceived ideas I mentioned earlier, perhaps the biggest one is that France is a high-tax country. 

Overall, I would suggest this comes into the category of being partially true but it is very often exaggerated.

In short, work carries a heavy tax burden for companies and the self-employed in France.

However, for individuals, tax on capital can be moderate to low, which means a tax burden will very much depend on personal circumstances.

Most married couples pay less income tax in France than in the UK. This is not an opinion but a statement of fact. 

This is because income is spread evenly between members of the household, meaning both spouses can fully benefit from tax allowances. 

If there are children still living at home, there are additional allowances. 

A French tax that has historically attracted a lot of negative press is wealth tax.

Well, did you know that wealth tax no longer exists in France? 

In 2018, it was replaced by a property wealth tax, for those with property assets over €1.3million. 

This greatly reduces the number of people liable, particularly as a primary residence benefits from a 30% allowance.

There remain two other taxes we have not covered, but should you be concerned? I would suggest not, and this is why.

3. Capital gains tax, inheritance tax and pensions

Excluding property, when selling assets there are perfectly legal ways to pay no capital gains tax at all. 

Where CGT must be paid, the maximum rate is currently 30%.

Inheritance tax can be more complicated and must always be considered on a case-by-case basis, as matters very much depend on personal circumstances and the make-up of the family unit.

Nevertheless, there are perfectly legal ways to get around strict inheritance laws in France. 

Furthermore, inheritance tax can potentially be reduced from 60% to 20%, after generous tax-free allowances. 

There are tax-efficient savings vehicles in France

Thus, having considered tax concerns, we can conclude that, depending on your specific situation, there is every chance you might actually be taxed less in France than in the UK.

To find out exactly what your tax position would look like as a French resident, a tax and investment consultant should be able to provide a comprehensive breakdown, giving the information you need to make an informed decision.

One thing to watch out for is that, as a French resident, you will almost certainly pay more tax if you leave savings and investments in the UK.

It is important to be aware of all the tax-efficient savings vehicles in France, ideally before you leave the UK, as these can help access significant tax savings.

As far as pensions are concerned, in certain cases, but by no means all, it can be beneficial to cash in UK pensions in full. 

However, it is important to note that QROPS (Qualifying Recognised Overseas Pension Schemes) are not recognised as qualifying pensions in France. 

4. Healthcare benefits

Finally, when considering residency, you can be reassured by the fact France has one of the best health systems in the world. 

By right, it is open to all residents. Retirees holding an S1 will have their cover paid by the UK. Early retirees generally pay much less than expected. 

The process of becoming French-resident has become slightly more bureaucratic since Brexit as you must now apply for a long-term visa before leaving the UK, but otherwise very little has changed for the British living in France.  

Any move to a foreign country will require a certain amount of preparation, ensuring peace of mind, so there is no time like the present to start setting the wheels in motion. 

With both health and finances in a good place, France can boast unrivalled quality of life.

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