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
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
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