Six financial essentials if you are moving to France
In this month's money column, Bill Blevins covers wealth management review on the list of jobs to do when moving to France
'Make sure your financial planning is up to date and appropriately designed for your life in France' Pic: NeydtStock / Shutterstock
Bill Blevins, the joint founder of Blevins Franks and writer of this column in The Connexion for many years, sadly passed away recently after a long illness.
Bill worked closely with David Franks to build Blevins Franks into the leading international tax and wealth management advisers to UK nationals living in, moving to and returning from Europe. His lively personality, insight and generosity made a big impact on staff and clients alike.
The sympathies of all Bill’s colleagues at Blevins Franks are with his wife and family.
Rob Kay, a Senior Partner at Blevins Franks who worked closely with Bill over many years and who has decades of experience advising UK nationals in France, will write this column moving forward.
If you are new to living in France or are in the process of organising your move here, you probably have a list of jobs to get through.
While it may seem long enough already, you should include a wealth management review on the list. It is important to adjust your tax, financial and estate planning for your new life in France and spending a little time on it now will reap dividends and give you peace of mind.
If you have been living here for a while, when was the last time you reviewed your financial planning? Are you sure it is up to date and appropriately designed for your life in France?
Residence has become a bigger issue for UK nationals following Brexit. There are, in fact, two concepts of residence you need to be aware of and plan for:
- Lawful residence – your rights, as a national of one country, to live and work in another;
- Tax residence – the country which has taxing rights over your worldwide income, gains and wealth.
If you were not on time to secure your legal residence under the Brexit Withdrawal Agreement, do not worry. It is generally still possible to retire in France.
You will need to clear a few more bureaucratic hurdles, but with advance planning and a little patience you can achieve your dream. Make sure you understand the rules for French tax residency (it is not just about day counting) and, if you meet any of them, that you correctly declare your worldwide income, gains and property wealth as required by French tax law.
If you hold assets or receive income in another country, follow the double tax treaty to pay tax in the right place.
The headline rates of tax in France can be a little off-putting, but the tax burden on investment income and assets has improved since the 2018 tax reforms.
It is certainly worth reviewing your investment assets to see how you can take full advantage of this more favourable taxation.
In any case, the French tax regime offers opportunities to lower your liabilities, from the parts system for general income to tax-efficient arrangements for your savings and investments.
Do not presume that what was tax-efficient in the UK is tax-efficient in France. You may need to convert existing arrangements to ones more suitable for French residents.
Some investment arrangements in France, such as assurance-vie, allow you to reduce your annual taxable income (without necessarily reducing actual income), which can make a considerable difference to your tax bill.
If you have not yet moved to France, investigate whether you are better off, tax-wise, selling your UK home while still UK-resident or waiting until you live in France. If you have not yet bought your French home, be aware that the way you hold property could have unexpected tax and inheritance consequences.
If you opt for joint ownership, should it be en indivision, en tontine or an asset included in your marital community? Or should you buy through a société civile immobilière (SCI), a special type of French company?
Explore all your options – the best one for you will depend on your family situation and aims.
Note also that if your household’s worldwide real estate portfolio amounts to more than €1.3million, you will be liable for France’s annual property wealth tax.
Inheritance taxes and estate planning
Will the right money go to the right hands at the right time? French inheritance tax and succession law are both very different to the UK’s so, to ensure your wishes are carried out, take professional advice from a locally based adviser.
Succession tax can be high, up to 60% for distant or non-relatives, but there are often ways to lower this liability for your heirs.
French succession law imposes forced heirship. UK nationals can use the EU succession regulation to opt for UK succession law (but not tax) to apply to their estate, but first understand how this works and the potential consequences to establish if this is the right route for your family.
Your investment portfolio
Review all your savings and investments to check they are suitable for you now. Are you holding the right spread of assets to meet your objectives, time horizon and risk tolerance? Do you need to hold more assets in euros and diversify away from UK shares and bonds? For peace of mind, obtain an objective analysis of your risk profile, then ensure the mix of assets you have in your portfolio is entirely suitable for you and your needs going forward.
Retirees should review their pension funds and the options available to consider how to maximise their retirement savings.
Living in France presents opportunities. As a non-UK resident, you may be able to transfer your funds out of a UK scheme and into a Qualifying Recognised Overseas Pension Scheme (QROPS), which can provide various benefits. But explore all options before determining which is best for you.
Under certain circumstances, France only levies 7.5% income tax on pension lump sums.
This could enable you to move the capital into more tax-efficient arrangements, but this is only suitable for some people, depending on their position. Do not risk your retirement savings: take professional, regulated advice.
For the best results, consider all these essentials in conjunction with each other. Often, one will impact upon another, so working on them in isolation could have unexpected consequences.
Ultimately, you want peace of mind that all your affairs are in order and designed in the best way to achieve your wishes. Taking professional guidance from a locally based adviser will ensure you have the facts and understand your options.
Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our, Blevins Franks, understanding of current taxation laws and practices which are subject to change; Tax information here has been summarised; an individual is advised to seek personalised advice.