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Living France - - CONTENTS -

Our ex­perts give their ad­vice on sell­ing shares, ir­ri­gat­ing gar­dens and long-term rentals

THE LION’S SHARE

Q The ques­tion I have is with re­gards to sell­ing shares when you have a num­ber of them of the same com­pany, bought at dif­fer­ent times and there­fore dif­fer­ent prices. For the cal­cu­la­tion of cap­i­tal gains do you have to sell the old­est shares first (First In First Out – FIFO) or al­ter­na­tively Last In First Out? Si­mon McBride A If you are res­i­dent in France you are li­able to French cap­i­tal gains tax on the sale of shares (in­clud­ing unit trust funds and those within ISAs, as these are not tax-ef­fi­cient in France) wher­ever they are held. The gain is tax­able at the scale rates of in­come tax, plus so­cial charges of 15.5%, bring­ing the to­tal tax rate up to 64.5%.

The cap­i­tal gain is equal to the dif­fer­ence be­tween the dis­posal con­sid­er­a­tion and the ac­qui­si­tion cost. To an­swer your ques­tion, when you have a num­ber of shares from the same com­pany that you bought at dif­fer­ent prices, the method to cal­cu­late the gain is the weighted aver­age ac­qui­si­tion cost of those shares.

For ex­am­ple, say in 2010 you ac­quired 100 shares at a cost of €93 each. In 2014 you ac­quired a fur­ther 200 shares in the same com­pany at a cost of €105 each. In 2016 you sold 250 of those shares at a price of €115 each.

In or­der to de­ter­mine the net gain, the weighted aver­age ac­qui­si­tion cost of these shares is: [(100 x €93) + (200 x €105)]/300 = €101. Thus, the net gain is (250 x €115) – (250 x €101) = €3,500.

While the mar­ginal tax rate is high and the po­ten­tial charge sig­nif­i­cant, French cap­i­tal gains tax on shares is not as bad as it looks as there are sev­eral mea­sures to re­duce your li­a­bil­i­ties.

In­deed, France has a gen­eral ta­per re­lief of 50% for in­vest­ments held for be­tween two and eight years and 65% for hold­ings of more than eight years. There­fore, if you hold shares for at least two years, 50% of the gain on dis­posal would be free of tax, and if held for more than eight years, 65% of the gain would be tax-ex­empt. How­ever these ex­emp­tions do not ap­ply to so­cial charges, which re­main payable on the full gain at a flat rate of 15.5%.

There is also a more gen­er­ous re­lief gov­ern­ing the sale of shares re­lat­ing to small and medium com­pa­nies (SMEs) cre­ated within the last 10 years, and which are based within the Euro­pean Eco­nomic Area (EEA). This re­lief also ap­plies to sales of EEA SME shares by busi­ness own­ers on re­tire­ment, as well as shares sold within a fam­ily. In those cases, 50% of the gain is ex­empt for in­vest­ment held for be­tween one and less than four years, 65% if held for more than four years but less than eight, and 85% there­after. ROB KAY

* Sum­marised tax in­for­ma­tion is based upon our un­der­stand­ing of cur­rent laws and prac­tices which may change. In­di­vid­u­als should seek per­son­alised ad­vice.

TURN­ING OVER A NEW LEAF

Q My hus­band and I are think­ing of re­tir­ing in the French coun­try­side. I am an avid gar­dener and need to find out about ir­ri­ga­tion there. Do peo­ple tend to use sprin­klers or hoses, or do they pre­fer to use well or stream wa­ter? Chris Lane A Rest as­sured that there will be no prob­lem when it comes to gar­den ir­ri­ga­tion in your new French jardin. There are in­deed sprin­klers and seep hose sys­tems read­ily avail­able at gar­den cen­tres and the quin­cail­lerie. Older houses out in the coun­try tend to have out­door wells, while new builds have out­door taps.

The ma­jor­ity of the older gen­er­a­tion of coun­try­side gar­den­ers use well wa­ter, and it’s a sim­ple mat­ter to pur­chase a pump and use wa­ter from the well. Do make sure that the pump you buy is pow­er­ful enough to lift the wa­ter from the bot­tom of the well, as some are quite deep. Also, check the qual­ity of well wa­ter to en­sure that there are no nat­u­ral min­er­als that may be harm­ful to plants (I doubt there will be, but it’s as well – for­give the un­in­tended pun! – to be sure).

The rain that falls on the roof of your house can be put to good use, and there are var­i­ous ways of stor­ing it. Plas­tic wa­ter butts are use­ful. In wine-pro­duc­ing areas, it might be pos­si­ble to pur­chase old wooden bar­rels that have been dis­carded in favour of more mod­ern con­tain­ers. Farm­ers of­ten buy chem­i­cals in plas­tic tanks; pro­vided they are washed out thor­oughly (and away from any nat­u­ral wa­ter source into which they might leak), these can also be used.

You might no­tice that in gar­dens and al­lot­ments, rain is col­lected from shed roofs via gut­ter­ing and into an old bath or open-topped con­tainer. If you do this, make sure that you wedge a log or plank of wood on the in­side to al­low frogs, lizards and birds to clam­ber out should they be un­for­tu­nate enough to fall in. It is, though, best to cover any wa­ter con­tainer – not only to pre­vent ac­ci­dents but also to min­imise evap­o­ra­tion. Happy gar­den­ing! JEREMY HOBSON

RENTING RULES

Q I have a ques­tion about long-term renting over one year. Prior to me hav­ing to find pri­vate rental for most of 2016, I had been look­ing at renting via French agen­cies.

I was ad­vised that to do this I would need proof of earn­ings in France. Later in the year I heard that EU leg­is­la­tion was com­ing that al­lowed for proof of earn­ings in any EU coun­try. So my ques­tion is whether or not my three years’ ac­counts for earn­ings in the UK is suf­fi­cient? Also, should I have reg­is­tered with the tax au­thor­i­ties in France even though I was be­ing taxed in the UK? Michael Baker A There is a half­way house be­tween renting long-term un­fur­nished, per­ma­nent ac­com­mo­da­tion and find­ing some­where to stay for longer than a hol­i­day but not com­mit­ting you to a long lease of three, six or nine years, which is the norm in France. Most es­tate and let­ting agents, when they talk about renting, as­sume you want this kind of a lease. Very few are con­ver­sant with the pos­si­bil­ity of lo­ca­tion meublée which is a per­fectly le­gal way of let­ting a fur­nished prop­erty for up to one year. For this type of rental you may not be asked for proof of earn­ings, but the owner would prob­a­bly ask for a ref­er­ence, be it from a bank or a pro­fes­sional per­son who can vouch for you. They would then re­quire a month’s worth of dam­age de­posit along with one month’s rent in ad­vance.

If you in­tend to come and stay in France for more than 183 days in the year, then yes, you would be deemed to be res­i­dent in France, so should reg­is­ter with the lo­cal tax of­fice. You would then pay your taxes in France but would be able to take ad­van­tage of the dou­ble tax­a­tion treaty be­tween the UK and France to make sure you were not taxed twice on the same in­come. That is a very com­plex field that is not pos­si­ble to ad­dress in this re­ply to your query, but you can find many tax ex­perts who will be able to ad­vise you on your par­tic­u­lar cir­cum­stances. ANNE CUNNINGHAM-DAVIES

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