Reviewing your financial planning

If you are moving to France soon or have recently arrived, it is important to review and adjust your financial planning to take account of local rules such as taxation and succession, and to take advantage of available tax and estate planning opportunities. You also need to ensure your arrangements are suitable for this new phase of your life.

Even if you have been living in France for some time, it is still advisable to review your wealth management around once a year. This helps ensure everything remains up to date, taking into account any changes in tax rules or financial regulations, as well as developments in your personal circumstances that may require adjustments to previous arrangements.

Many people consider their finances in isolation. They may have bought shares in companies they like, invested in funds recommended years ago by an adviser, consulted a tax accountant about French taxation, and later spoken to a lawyer about setting up a French will.

For effective financial planning, however, all of these aspects need to be considered together. How you hold your investments can significantly affect your French tax liabilities. Estate planning in France is particularly complex due to forced heirship rules and succession tax, and the way assets are owned can directly affect what is achievable.

For more advice on tax and wealth management in France contact Blevins Franks or visit their website here.

French residency and taxation

Being resident in France, rather than the UK, has a major impact on your financial planning.

First, it is essential to establish where you are resident for tax purposes. French and UK tax residence rules can be more complex than they initially appear, and it is important to understand how the double tax treaty applies to your situation.

No matter how effective your tax planning was in the UK, you will generally need to start afresh in France. Arrangements that were tax-efficient across the Channel are often not suitable here, so it is important to explore compliant structures that provide tax advantages under French rules.

French tax residency can offer advantages in certain situations. For example, if you are able to take your entire pension as a lump sum, some individuals can limit taxation on the full amount to 7.5% (with a 10% allowance), depending on their circumstances. This applies even though the UK’s 25% tax-free lump sum is no longer available.

Pension income and lump sums are also subject to French social charges of 9.1%, unless you hold a Form S1 or are not registered in the French healthcare system.

Estate planning

Estate planning should not be left until the final stage of financial planning. The way you own property and investments in France affects how assets can be distributed on death and how much tax beneficiaries will pay. These considerations should be taken into account when acquiring assets and setting up investment arrangements.

French succession law can have unwelcome consequences for some families. UK nationals may use the EU regulation known as Brussels IV to elect for UK law to govern the distribution of their estate. However, this option should be researched carefully, as it is not always the most appropriate solution.

Financial structuring for life in France

A key principle of financial planning is that it must be tailored to your personal circumstances: your current lifestyle and future plans, family situation, income needs, objectives, time horizon, and risk tolerance.

If you do not already have a strategic financial plan for France, you may need to take a fresh look at your savings and investments. Are they still suitable for your situation today? Are they too risky? Is your portfolio adequately diversified? Do your investments meet your income and long-term needs?

At the same time, consider your tax liabilities on investment income and whether alternative, tax-efficient structures could be used. It is also important to think about how these assets will be passed on to your heirs, what inheritance taxes they may face, and whether funds can be transferred directly or will be subject to a lengthy probate process.

Every family’s situation is different. Strategic financial planning should be carefully designed so that all elements work together cohesively, creating an overall wealth management plan that provides long-term financial security and fulfils your wishes for your heirs. Professional, expert advice can help ensure you get this right.

About Blevins Franks

Blevins Franks specialises in providing integrated cross-border tax and wealth management advice to British expatriates in France. We have 40 years’ experience and nine offices across France, with 17 advisers living here, as well as offices in London, Malta, Spain, Portugal, Cyprus and Monaco.

Working with tax, estate planning, investment and pension specialists, we take a holistic approach to establish the most effective solutions for you and your family. Our overriding aim is to give you peace of mind that your financial affairs are in order, both now and in the future.