The French taxation system is different than in the UK. For instance, you have to be careful with inheritance laws. However, there is nothing to worry about if you make the right decisions from the beginning. In order to avoid any unexpected taxation, we can advise you on the best way to navigate the system.
Once you have bought your property in France, you must register with the French Taxation Centre for Non-Residents. France has signed taxation treaties with most countries, which means that you avoid double taxation in France and in the UK.
You will find below the main French taxes:
This is a local tax that is paid by the owner of the house. The size of the property determines how much is paid and owners of new properties are exempt for the first two years. The tax is paid by the person owning the property on 1 January each year with payment due in the final quarter of the year. If the property ownership changes during the year, the purchaser usually reimburses the seller for the tax of the remaining portion of the year. This tax is not onerous, for example it can be 350€ (£230) a year for a farm-house in Dordogne.
This is a local services tax paid by the occupier. It covers the services and maintenance provided by the local council and again is payable annually in the last quarter of the year. The charge is typically around 25% of the Taxe Foncière.
French Inheritance laws
French law will apply to the inheritance of the property in France.
These laws are complex and the way they work will depend on your particular circumstances. French law gives certain rights to family members, and these rights cannot be ignored.
Sextant Properties can give you some contacts from UK solicitors specialized on the French property market, to ensure you receive clear advice that is adapted to your personal circumstances concerning this market.
Frequently Asked Questions:
Does my spouse/husband automatically inherit the property when I die ?
The answer is no. However, there are different arrangements that can be put into place, depending on the individual situation, which can either ensure this happens or protect the survivor as far as possible whilst respecting other principles of French law.
What inheritance tax will my estate have to pay?
In France, inheritance tax is based on the amount each individual receives and their relationship to the person who has died. Therefore, different methods of calculation of the tax apply to each beneficiary; for example, there is one rule and rate for a spouse and another for a child. It may be possible for married people to arrange their affairs in a particular way so as not to pay any tax, or for unmarried people to make arrangements to avoid some of the very high taxes that those who are unrelated have to pay.
Capital gain taxes
The capital gain taxes can be expensive for individuals who sell their French properties. For non-residents living in Europe, taxes are 19%. For residents they are 34.5%. However, it is possible to optimize your capital gain by deducting all your expenses and according to your tax allowance. It may be a good idea to study if you should buy your property through a company.
To get some advice on the advantage of holding a company, a solicitor specialized in the French property market is again the best way for your peace of mind.