Straightforward financial planning for French property owners and buyers can wipe out huge amounts of tax.
As anyone who has had a brush with the French equivalent of HM Revenue and Customs knows, the tax system is devilishly complex.
This is a throwback to the 19th century and how the laws in both countries developed down different routes.
One of the main issues is a hugely different interpretation of how your estate is handled once you pass on and how the assets you have built up are taxed.
The good news is with the help of an independent financial advisor with expatriate experience and estate planning, you can minimise your inheritance tax in both countries.
In France, on your death all your assets are totalled – that’s property, belongings and investments and tax paid on the whole amount.
In France, one of the key tax saving products is Assurance Vie – which translates in to something similar to an investment bond in UK financial services.
If you arrange Assurance Vie before you leave the UK, as a non-French resident the advantages are:
- No CSG tax on French Assurance Vie investments
- No IHT on any assets wrapped in the Assurance Vie
Another tax advantage is that Assurance Vie has no caps on assets or savings held in the policy.
The tax rules apply to expatriates intending to move to France permanently and to UK residents who own and let out property in France.
If you are considering retiring to France, the policy has to be started before you are aged 70 years to benefit from the tax advantages.
The tax saving benefits of Assurance Vie are advantageous if your inheritors are not direct related – because it wipes out tax that can be charged at up to 60% of the amount transferred on your death.
As with all financial advice, make sure you speak to a UK regulated independent financial advisor who has experience in dealing with the affairs of expats to ensure you receive the best advice and have some come-back, on the advisor if your financial plans go wrong.
