Update: Potential new tax for newcomers to France

Update June 30 2021: See here for the latest on this issue

It has come to light that Britons moving to France in the second part of this year may be subject to extra taxation, if new customs rules are strictly applied.

As reported in the March edition of The Connexion, there are already new customs formalities, and in some cases VAT and customs duty payable, when moving items above a certain total value from the UK to France.

This is because the UK is now a ‘third country’ to the EU and outside the single market and customs union.

However there is usually an exception for those moving from third countries to make France their main home (even so, formalities are involved, including an inventory of the goods).

As we explained in our article, these rules are now expected to apply to those coming from the UK.

However an expert from the French Douanes service has clarified that there is a further potential issue when coming from the UK.

The points above about moving home to France are in compliance with France's usual policy for those moving from non-EU countries.

However the Douanes expert said normally a person must have lived in a 'third country' (non-EU) for at least 12 months before moving to France, to qualify.

Due to the transition period during which all the EU rules applied to the UK, she said France does not consider the UK was fully a third country last year.

At present however, it has agreed to apply the exemption from import duties as though living in the UK for 12 months was equivalent.

It has however so far only decided to apply this rule with regard to VAT for six months after the transition period.

This means that if no further decision is taken on this, it is possible that moves from July to December 2021 could be subject to VAT.

The expert said the difference in treatment between customs duty and VAT may possibly be because customs duty goes to the EU as a whole, while each state keeps the VAT it applies.

What is more more new French customs rules since full Brexit state that for the six months' VAT exemption to apply on moving from the UK any VAT or customs duty that would normally have been payable on items in the UK or another EU country should have been paid, 'in accordance with EU directive 2009/132/CE'.

This EU directive says this rule is optional for EU states to apply, and The Connexion notes that the standard Douanes information for those coming to France after living for more than 12 months in a third country states it does not matter how items were acquired and whether or not tax was paid on them.

It is unclear how strictly these new rules will be applied in practice.

Rules for moving from the UK would be expected to revert to the standard ones for moving from a third country from 2022.

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