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

Living France - - LES PRATIQUES -


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. forth­cap­i­ 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. sur­

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