Ask the experts
Whether you’re planning your move to France, or are already living there, our panel of professionals aims to keep you fully informed with the best advice for every eventuality
QMy partner and I intend to buy a house in France this year. We are not married and both have adult children from previous relationships. What should we know about French inheritance tax and is there anything we can do to minimise it? JENNIFER MORGAN
AWhen purchasing a property in France, it is important to consider whose name the property will be purchased in, or whether you will buy it in joint names. Factors to take into account when making the decision include who the beneficiaries will be and the French succession tax implications when the property is eventually inherited.
French inheritance tax is payable by the beneficiary. It is calculated according to their relationship with the deceased and the amount they inherit. Spouses are exempt from inheritance tax in France, but the tax rate which applies to assets passing between unmarried couples is a flat 60%. To avoid this rate, you need to ensure that the property does not pass between you on death.
Where property passes to children, each child is entitled to an allowance of €100,000. Tax is then applied to the balance, at scale rates ranging from 5% to 45%, although the top rate would only apply where a child inherits over €1.8m. Therefore, the amount of tax payable will depend on the number of beneficiaries and the value of the property. The rate of tax payable where a stepchild inherits from a step-parent is 60% and this NICOLE BOOTH is head of tax at Forth Capital and focuses on all aspects of tax planning for individuals looking to relocate or purchase properties abroad. forthcapital.com situation should therefore be avoided.
If you are domiciled in the UK at the date of death and the total value of your estate exceeds the UK inheritance tax nil-rate band, which is currently £325,000 per person, UK inheritance tax may also be due on the French property. However, any French tax paid can be offset against the UK tax payable on the same asset to avoid double taxation.
Another point to take into account is that if you purchase the property jointly, and your children inherit your respective shares, you will end up in a situation where all the children co-own the property together, and this could lead to complications if there are disagreements between any of the parties. For example, if a sale is envisaged, all parties would need to agree.
As these are complex issues, we would recommend you seek professional advice prior to the purchase of the property to ensure that you are aware of all the tax and legal implications of your chosen ownership structure. NICOLE BOOTH
I’ve recently completed the purchase of a property in France and intend to make a permanent move in the near future. I understand that the S1 form is no longer issued for early retirees, and as I am not yet of UK pension age (I am 52) I wonder what my options are in terms of health cover in France? I’ve heard top-up insurance mentioned but I’m not sure I understand what this means and whether this is something I would need? HENRY GREEN
AHaving a French address does not automatically give you French social security/healthcare rights, as there are protocols to abide by, and it all depends on your age and personal situation.
You mention the S1 (short term) health form which was once known as the E106. This was issued for a maximum of two years and you are quite right that the UK withdrew this form for the ‘early retiree’ category in July 2014. This should not be confused with the S1 (unlimited duration) health form, which still exists at this moment in time for those in receipt of a UK state pension.
However, in your situation, so long as you are not considering starting your own business and registering as self-employed, you can officially make a formal request to affiliate into the French healthcare system via the Couverture Maladie Universelle (CMU) protection de base. However, you will have to submit, together with the S3710 application form, proof that you have been a permanent resident in France for more than three ANDREW BAILEY is a chartered surveyor and director of Surveylink France. He provides French property surveys across the whole of France. surveylink-france.co.uk