how to navigate the rules of wealth tax and forced inheritance – .

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how to navigate the rules of wealth tax and forced inheritance – .


Obtaining the right to move: sorting your visa

Retirees need less stringent visas than workers to cross the Channel. The long-stay visa, known as the “VLTS-TS Visitor visa”, is intended for those who plan to live off their capital, investments and retirement income and is therefore perfect for retirees.

Anyone planning to relocate must apply for the visa within 90 days of their intended departure and can submit a request through the French consulates, which are located in London, Manchester and Edinburgh. This visa will be valid between 3 and 12 months.

Once in France, the visa must be validated by the French Immigration Office. Once expired, it can be replaced by a visitor residence card, which can be processed by the local “prefecture”.

After five years of living in France, the British can apply for permanent residence – the “long-term resident card” – which is valid for 10 years and gives the right to work in the country. For a successful application, certain conditions must be met, such as private health coverage, stable and sufficient funds and proof that the candidate has integrated into French society. They must also have been in France continuously for the past five years, without more than 10 months of absence.

Everything you need to know about French tax rules

Anyone planning their move should consider their financial and fiscal situation before moving, otherwise they will face high bills.

UK tax-advantaged investments such as Isas and venture capital trusts do not enjoy the same overseas tax treatment. A key difference in France is its higher capital gains tax.

The British previously benefited from a reduced rate of social charges but which no longer applies after Brexit, the CGT is therefore now billed at 36.2 pc instead of 26.5 pc. This also applies to gains made on rental income.

Mr Porter said: ‘This could particularly hit UK citizens who have retained their former UK primary residence and are not selling until they have moved to France. The French primary residence reliefs are different from those in the UK, so although there may be little or no capital gains tax payable to the UK government on the sale of a house in the UK – United, the rules in France are all or nothing. Do not meet the conditions and the entire gain becomes taxable in France, but with relief for the number of years the property has been held.

In addition to the cost of selling a house, there is a surcharge, billed at five different levels depending on the size of the capital gain. All winnings from € 50,000 to € 100,000 are taxed at 2pc, gradually increasing to 6pc on anything over € 250,000.

As for pensions, any income withdrawn is taxable where the person lives, so in France rather than in the United Kingdom.

Importantly, the 25% tax-exempt retirement cash rule no longer applies, Porter said. France does not have a non-taxable element of a pension fund. Those who plan ahead may be better off before moving to avoid big bills.

Many expats continue to falsely pay taxes in the UK after moving, which can have serious repercussions. The French tax inspector deals with all cases where people have not submitted the appropriate French tax returns or have seriously under-declared. This is tax evasion, even though it happened innocently, Porter warned.

Stating that the tax was wrongly paid in the UK rather than in France will not be considered a defense under French law.

Some UK tax-advantaged investments become unavailable after you move abroad, including Isas. Expats can continue to hold a British Isa but cannot continue to contribute as long as they live outside the country. However, the capital gains realized on the shares held in these Isas will be taxed by the French.

France has its own tax-advantaged investments which can serve as a substitute as they can reduce taxable income.

French tax residents, including the British, are taxable on their income anywhere in the world, including interest earned on bank savings even if they are not actively used to make money from them.

Everyone must declare all their bank accounts to the French authorities and failure to do so may incur a fine of up to € 10,000 per unreported account as well as criminal prosecution.

Wealth tax

And of course France has its infamous wealth tax. It only applies to real estate assets exceeding € 1.3 million, reassessed each year. The spouse’s property is included. In the event of taxation, only the first € 800,000 are exempt from tax, then the charges are 0.5 pc for assets between € 800,000 and € 1.3 million. This amounts to 1.5 pc for all assets over € 10 million.

Wealth tax is not due for UK nationals until five tax years after they become residents in France. Previously, it is based only on real estate assets in France and all other assets are ignored.

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