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Living France - - Les Pratiques -

BUY­ING A PLOT OF LAND

QWe are in the lat­ter stages of buy­ing a small house in Poitou-Char­entes. Dur­ing the orig­i­nal ne­go­ti­a­tions, the English ven­dors threw in a nearby build­ing plot with plan­ning per­mis­sion and all ser­vices al­ready in­stalled. Its price is not sep­a­rately shown in the com­pro­mis de vente — there is just one price for both. In the be­gin­ning, this seemed to be to our ad­van­tage but we now won­der whether the plot will at­tract taxe fon­cière or d’habi­ta­tion? Also, if we sell will we be li­able for cap­i­tal gains tax?

In truth the plot was ac­cepted in lieu of our at­tempt to ob­tain a price re­duc­tion of €2,000 and the agent sug­gests he could ask €10,000 for the plot on our be­half. Our to­tal pur­chase price for both is €19,000. ALUN JENK­INS

AThere is gen­er­ally an ex­emp­tion to lo­cal taxes where a prop­erty is be­ing built. If there is any taxe fon­cière charge, it is un­likely to be a sub­stan­tial amount. The best thing to do would be to check at the mairie for this.

While the con­tract it­self may not have spec­i­fied the value for the sep­a­rate land pur­chase, it is pos­si­ble to es­tab­lish this should there be a de­sire to sell off the plot.

If the plot was sold at a profit, then there would be a po­ten­tial cap­i­tal gains tax li­a­bil­ity, in both France and the UK, pre­sum­ing the buy­ers are UK tax res­i­dents — there is a dou­ble-tax treaty that means the same tax is not paid twice. The amount of tax payable could be es­ti­mated in ad­vance, al­though it is not likely to be sig­nif­i­cant. It is pos­si­ble that MATTHEW CAMERON is part­ner and head of the French Le­gal Ser­vice team at law firm Ash­ton KCJ. ash­tonkcj.co.uk var­i­ous al­lowances would ren­der the over­all bur­den to be very small.

It is nec­es­sary, though, to look into the plan­ning per­mis­sion sit­u­a­tion. Plan­ning per­mis­sions are only valid for a spe­cific pe­riod, and they can ex­pire. This also means that sub­stan­tive works should be car­ried out to a plot reg­u­larly if the per­mis­sion is to re­main in force. It is pos­si­ble that if no work has been car­ried out to the prop­erty for a long time, the per­mis­sion might have lapsed. Again an en­quiry at the mairie would be pru­dent to as­cer­tain if there are any con­cerns with real va­lid­ity. MATTHEW CAMERON

TAX RE­TURNS

QWe are mov­ing to France in the spring as we have just had an of­fer ac­cepted on a prop­erty in Aquitaine. As we in­tend to spend a fair amount of time there, but won’t be res­i­dents as such, I am con­sid­er­ing in­vest­ing in euro-priced shares on the French Bourse. The plan is to hedge, to some de­gree, against the weak­en­ing of ster­ling by gen­er­at­ing an in­come in euros to use for such things as taxe fon­cière, gas and elec­tric­ity and gen­eral ev­ery­day ex­penses. As we won’t be res­i­dents, do we have to de­clare that in­come to the French tax au­thor­i­ties, or should the in­come be de­clared on our UK tax re­turn? For ei­ther case, how do we go about it, please? I al­ready have a French bank ac­count and re­ceive a small French state pen­sion (€21 per month!) from when I was work­ing in France in 1968. Do I also have to de­clare that to ei­ther the English or French tax au­thor­i­ties? RON STONE

AUn­der­stand­ing your tax res­i­dence po­si­tion is es­sen­tial as your main tax li­a­bil­i­ties fall in your coun­try of res­i­dence. Given the com­plex­ity of tax res­i­dency rules, we would al­ways rec­om­mend that you speak with a spe­cial­ist.

As a UK tax res­i­dent, you must de­clare your world­wide in­come and gains (in­clud­ing your French state pen­sion) to HM Rev­enue & Cus­toms while also pay­ing UK in­come tax on such earn­ings. You will have to file a self-as­sess­ment tax re­turn ei­ther on 31 Oc­to­ber (pa­per tax re­turns), or 31 Jan­uary (on­line tax re­turns).

In ei­ther case, the tax will be due on 31 Jan­uary fol­low­ing the end of the UK tax year (al­though some pay­ments on ac­count may also be re­quired).

You will also have to de­clare to the cen­tre des non-rési­dents your French source of GUILLAUME POIS­SANT is a com­pany di­rec­tor and agent général at AXA CL&P As­sur­ances, based in Mor­bi­han, Brit­tany. clp-as­sur­ances.fr

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