Bill Blevins, co-founder of Blevins Franks and long-time author of this column in The Connexion, sadly passed away recently after a long illness.
Bill worked closely with David Franks to make Blevins Franks a premier international tax and wealth management advisor to UK citizens living in, moving to and returning from Europe. His lively personality, empathy, and generosity had a huge impact on employees and customers alike.
The condolences of all of Bill's colleagues at Blevins Franks go out to his wife and family.
Rob Kay, Senior Partner at Blevins Franks, who has worked closely with Bill for many years and has decades of experience advising British citizens in France, will write this column.
If you are new to France or organizing your move here, you likely have a list of jobs to do.
While it may seem long enough, it's worth adding an asset management review to the list. It is important to adjust your tax, financial and estate planning for your new life in France.
If you've lived here for a long time, when was the last time you checked your financial planning? Are you sure it is current and suitable for your life in France?
residence
Residency has become a bigger problem for UK nationals after Brexit. In fact, there are two living concepts that you need to know and plan:
- Legal residence – Your rights as a national of one country to live and work in another;
- Tax residence – the country that has tax rights on your worldwide income, profits and assets.
If you have not secured your legal residence in the context of the Brexit Withdrawal Agreement in time, do not worry. In France it is basically still possible to retire.
There are still a few bureaucratic hurdles to clear, but with planning ahead and a little patience, your dream can become a reality. Make sure you understand the rules of French tax residency (it's not just about day counting) and, if you meet any of them, that you are correctly reporting your worldwide income, profits and assets under French tax law.
If you hold assets or generate income in another country, follow the double taxation treaty to pay taxes in the right place.
Tax planning
Overall tax rates in France can be a bit daunting, but the tax burden on investment income and wealth has improved since the 2018 tax reform.
Definitely worth checking your fixed assets to see how you can take full advantage of this cheaper taxation.
In any case, the French tax system offers opportunities to reduce your liabilities, from the general income subsystem to low-tax schemes for your savings and investments.
Do not assume that what was tax effective in the UK will be tax effective in France. You may need to convert existing arrangements into ones that are more suitable for French residents.
Some investment agreements in France, such as B. Assurance-vie, allow you to reduce your annual taxable income (without necessarily reducing actual income), which can have a significant impact on your tax bill.
property
If you have not yet moved to France, see if you are better off for tax purposes selling your UK home while you are still a UK resident or wait until you live in France. If you have not yet bought your French home, be aware that the way you hold property can have unexpected tax and inheritance consequences.
If you choose co-ownership, should it be en indivision, en tontine, or an inheritance from your marital union? Or should you buy through a Société Civile Immobilière (SCI), a French company of a special kind?
Explore all the options – the best choice for you will depend on your family situation and goals.
Please also note that if your household has a worldwide real estate portfolio of more than 1.3 million euros, you will have to pay the annual French wealth tax.
Inheritance taxes and estate planning
Does the right money get into the right hands at the right time? French inheritance tax and inheritance law is very different from the British one. To ensure that your needs are met, seek professional advice from a local advisor.
Inheritance tax can be high, up to 60% for distant or unrelated individuals, but there are often ways to lower this liability for your heirs.
French inheritance law prescribes compulsory inheritance. UK nationals can use the EU Inheritance Regulation to opt for UK inheritance law (but not tax) on their estate, but first understand how this works and what the possible consequences this will have for your family.
Your investment portfolio
Now is the time to review all of your savings and investments to see if they are right for you. Do you maintain the proper diversification of assets to meet your goals, time horizon and risk tolerance? Do you need to hold more assets in euros and diversify away from UK stocks and bonds? Just to be safe, get an objective analysis of your risk profile and then make sure that the mix of assets you have in your portfolio is fully tailored to you and your future needs.
Pensions
Retirees should review their retirement funds and the options available to them to see how they can maximize their retirement savings.
Life in France offers opportunities. As a non-UK resident, you may be able to transfer your money from a UK scheme to a Qualifying Recognized Overseas Pension Scheme (QROPS), which offers several benefits. But explore all of the options before deciding which one is best for you.
France may only levy 7.5% income tax on flat-rate pensions.
This could allow you to move the capital to more tax-efficient structures, but it is only suitable for some people, depending on their position. Don't risk your retirement provision: get professional and regulated advice.
For the best results, you should look at all of these key factors in conjunction. Often times, one affects the other, so working on them in isolation can have unexpected consequences.
Ultimately, you want to be sure that all of your affairs are in order and optimally geared towards your desires. Getting professional advice from a local advisor will ensure that you have the facts and understand your options.
Tax rates, scope and tax breaks are subject to change. All taxation statements are based on Blevins Franks' understanding of current tax laws and practices, which are subject to change; The tax information has been summarized here; a person is advised to seek personal advice.