As a timescale is con­firmed for the UK to be­gin the process of leav­ing the EU, Rob Kay con­sid­ers the fi­nan­cial im­pli­ca­tions of Brexit in the com­ing year

Living France - - Contents - Rob Kay is se­nior part­ner at Blevins Franks blevins­ * Tax rates, scope and re­liefs may change. Any state­ments con­cern­ing tax­a­tion are based upon our un­der­stand­ing of cur­rent tax­a­tion laws and prac­tices which are sub­ject to change.

Rob Kay con­sid­ers the fi­nan­cial im­pli­ca­tions of Brexit in the com­ing year

As I write this, the High Court has ruled that Par­lia­ment must vote on whether the UK can start the process of leav­ing the EU, lead­ing to fur­ther un­cer­tainty over Brexit. If and when Ar­ti­cle 50 is trig­gered, we ex­pect that the ne­go­ti­a­tions will take at least two years, but we know lit­tle about how the UK’s fu­ture re­la­tion­ship with the EU will evolve.

This can be un­set­tling for those plan­ning to move to France, but we are op­ti­mistic that Bri­tons will con­tinue to en­joy the ben­e­fits of liv­ing or own­ing prop­erty in this beau­ti­ful coun­try. Here we take a look at the fi­nan­cial im­pli­ca­tions of Brexit.


For many peo­ple, Brexit will have no im­pact on how they are taxed in France, or taxed in the UK on French as­sets. If you live in France, the same tax rates ap­ply to all res­i­dents, re­gard­less of na­tion­al­ity.

If you re­ceive in­come from the UK, tax treat­ment is de­ter­mined by the UK/France dou­ble tax­a­tion treaty. The same ap­plies if you are a UK res­i­dent and have France source in­come. Such dou­ble tax treaties are agree­ments reached be­tween two coun­tries; they are in­de­pen­dent of the EU and so are un­af­fected by Brexit.

There are a couple of cir­cum­stances where tax­a­tion may be af­fected. For ex­am­ple, as­sur­ance-vie life as­sur­ance poli­cies are an ef­fec­tive way of hold­ing in­vest­ments in France and can pro­vide sig­nif­i­cant tax ad­van­tages. How­ever, the ben­e­fi­cial tax treat­ment given to EU poli­cies would no longer ap­ply to UK bonds once the UK is no longer an EU mem­ber. So you should seek ad­vice on the best ar­range­ments for your in­vest­ments and tax plan­ning.

Note also that France levies an exit tax on share gains made by in­di­vid­u­als who leave France af­ter be­ing tax res­i­dent for six years. The tax charge arises the day be­fore you leave, but pay­ment is de­ferred where the in­di­vid­ual moves to an EU mem­ber state or an EEA state that has a mu­tual as­sis­tance agree­ment with France. If you move to a non EU/EEA coun­try, tax can also be de­ferred, but you will need to ap­point a tax rep­re­sen­ta­tive.

If you are mov­ing to France to work, you may be able to take ad­van­tage of Ar­ti­cle 155B of the French tax code, which pro­vides spe­cial tax in­cen­tives for in­di­vid­u­als com­ing from over­seas to work in France. Fol­low­ing Brexit, the French govern­ment said that it wanted to make France Europe’s “most favourable” fis­cal regime for re­turn­ing ex­pats and for­eign ex­ec­u­tives. The tax ben­e­fits of this spe­cial in­pa­tri­ates regime cur­rently last for five years, but un­der the draft bud­get for 2017 this should be ex­tended to eight years. Those un­der this regime will no longer be sub­ject to ‘salary’ tax, a spe­cial tax payable by the em­ployer on the em­ployee’s in­come.


The ster­ling to euro ex­change rate has been the most im­me­di­ate is­sue to hit ex­pats in France and those plan­ning on buy­ing prop­erty there. Ster­ling may con­tinue to be af­fected as Brexit ne­go­ti­a­tions un­fold, but we can­not know to what de­gree or when the ex­change rate will start to im­prove.

At the time of writ­ing, the ex­change rate is 1.14, and while this is poor com­pared to the 1.30 we had the day be­fore the ref­er­en­dum, it is worth re­mem­ber­ing that it had fallen as low as 1.02 back in De­cem­ber 2008. UK na­tion­als con­tin­ued to move to France and buy prop­erty, and this may well con­tinue.

Cur­rency can move in both di­rec­tions as new events un­fold, such as the elec­tions in France, Ger­many and Hol­land next year or more im­mi­nently the forth­com­ing con­sti­tu­tional ref­er­en­dum in Italy – although the lat­ter is not a ref­er­en­dum about the EU but if the govern­ment lost it, Forbes mag­a­zine has spec­u­lated it could lead to the Prime Min­is­ter re­sign­ing and call­ing an elec­tion.

De­pend­ing on your sit­u­a­tion, you may find that you have to re­vise your short-term ex­pec­ta­tions of the sort of prop­erty your sav­ings can buy while ster­ling is weaker, but sell­ers in France will not want to lose their UK cus­tomers so hope­fully they will take the ex­change rate into ac­count.

You also need to con­sider what cur­rency to hold your in­vest­ment as­sets in. Ide­ally you should re­ceive some in­come in euros so that you are not mak­ing a cur­rency con­ver­sion every time you take in­come in France, though you may want to wait for a bet­ter rate un­til you switch as­sets to euros. Even then it may be a good idea to have both cur­ren­cies; like most things to do with your in­vest­ments,

di­ver­si­fi­ca­tion is the key to man­ag­ing risk. Much de­pends on your per­sonal sit­u­a­tion so talk to your fi­nan­cial ad­viser to es­tab­lish what will work best for you.

Note that you should not nec­es­sar­ily have to in­vest in euros even if us­ing an EU in­vest­ment ar­range­ment; you can keep your cap­i­tal in ster­ling. What you need is an in­vest­ment struc­ture that has a multi-cur­rency fa­cil­ity. This would al­low you, for ex­am­ple, to in­vest in ster­ling now and switch to euros (if you wish) at a later date. It should also give you flex­i­bil­ity in how you take with­drawals.

For most peo­ple, Brexit will have no im­pact on how they are taxed in France, or in the UK on French as­sets


Your in­vest­ment port­fo­lio should al­ways be care­fully con­structed around your cur­rent (and ex­pected fu­ture) cir­cum­stances, needs, ob­jec­tives, time hori­zon and risk pro­file. A move to France there­fore war­rants a re­view of your sav­ings and in­vest­ments.

Many Bri­tish in­vestors tend to favour UK as­sets in their port­fo­lio, even when liv­ing abroad. In­deed UK ad­vis­ers of­ten struc­ture their clients’ port­fo­lios this way, but that may not be the right bal­ance for you if you make a per­ma­nent move to France.

With Brexit, di­ver­si­fi­ca­tion is more im­por­tant than ever be­fore. Mar­kets have proved quite re­silient so far and the FTSE 100 is ac­tu­ally up year to date, but we have yet to see how the UK econ­omy will be af­fected as the exit ne­go­ti­a­tions un­fold. You should re­view your port­fo­lio to see if you are over­ex­posed to UK as­sets and con­sider how to im­prove di­ver­si­fi­ca­tion over dif­fer­ent as­sets classes, coun­tries, sec­tors, etc.


The France/UK dou­ble tax treaty on death is in­de­pen­dent of the EU so noth­ing will change re­gard­ing how your heirs are taxed, or how you are taxed on in­her­i­tances you re­ceive from the UK while liv­ing in France.

When it comes to suc­ces­sion law, un­der 2015’s EU suc­ces­sion reg­u­la­tion (Brussels IV), Bri­tish ex­pats can opt for UK suc­ces­sion law to ap­ply on their death in­stead of French law. Although an EU law, it ap­plies to third party coun­tries as well, so UK na­tion­als can con­tinue to use it af­ter Brexit.

How­ever, you need to be aware that opt­ing for UK law may have un­ex­pected neg­a­tive con­se­quences (un­re­lated to Brexit) so do seek spe­cial­ist and per­son­alised ad­vice.

All in all, we hope that Brexit does not pre­vent any­one from ful­fill­ing their dream of mov­ing to France. To pro­tect your fi­nances we rec­om­mend build­ing a good re­la­tion­ship with an ad­vi­sory firm based in France so they can ad­vise you on the im­pli­ca­tions of Brexit, and keep you up­dated on any key de­vel­op­ments.

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