Living France - - The Essentials -


My part­ner and I are mov­ing to France per­ma­nently this sum­mer with our two chil­dren, and won­dered what the im­pli­ca­tions would be in terms of in­come tax. We will be rent­ing out our house in the UK and we will both be work­ing in France, so where and how will we have to pay tax? Does the fact that we’re not mar­ried make a dif­fer­ence?



As a gen­eral prin­ci­ple, your coun­try of res­i­dence will sub­ject you to tax­a­tion on your world­wide in­come and as­sets. This means that once you leave the UK and move to France you will be taxed in France, not in the UK. How­ever, it is im­por­tant to un­der­stand how the dou­ble tax treaty af­fects the tax po­si­tion.

In France you are taxed on a house­hold ba­sis if you are mar­ried or if you en­ter into a PACS, which is a type of civil part­ner­ship avail­able to both mixed- and same-sex cou­ples. If you are not mar­ried or ‘PACSed’ you will be taxed on an in­di­vid­ual ba­sis.

The tax rates are pro­gres­sive up to 45% – the top rate is only ap­pli­ca­ble on in­come of over €150,000 per per­son. On top of in­come tax you will also have to pay so­cial charges which are ba­si­cally an­other form of tax. The rate de­pends on the type of in­come – for em­ploy­ment in­come the rate is 8% and for in­vest­ment in­come it goes up to 15.5%.

If you work in France you will be sub­ject to both in­come tax and so­cial se­cu­rity con­tri­bu­tions. Your em­ployer is re­spon­si­ble for reg­is­ter­ing you with the rel­e­vant so­cial se­cu­rity or­gan­i­sa­tion. There are gen­er­ally a lot more de­duc­tions avail­able against your in­come than in the UK. For ex­am­ple, you are en­ti­tled to a 10% de­duc­tion from your em­ploy­ment in­come for ex­penses re­lated to your work (sub­ject to a limit).

Your rental in­come will re­main tax­able in the UK un­der the nor­mal UK rules, i.e you are taxed on the net in­come after de­duct­ing any ex­penses re­lated to the rental busi­ness. In France, UK source rental in­come is not di­rectly tax­able but you have to re­port the in­come on your French tax re­turn. You then get a credit equal to the French tax that would be payable on that in­come.

You will also have to con­sider how the French in­her­i­tance law and tax would ap­ply on your as­sets. In France your bi­o­log­i­cal chil­dren are pro­tected and are en­ti­tled to a per­cent­age of the de­ceased par­ent’s es­tate. The rate of in­her­i­tance tax de­pends on the re­la­tion­ship be­tween the de­ceased per­son and the ben­e­fi­ciary. The rate of tax payable be­tween un­mar­ried cou­ples or other un­re­lated in­di­vid­u­als is 60%. There are ways of cir­cum­vent­ing the law and po­ten­tially mit­i­gat­ing the tax li­a­bil­i­ties. It is im­por­tant that you un­der­stand how the rules ap­ply in your cir­cum­stances since the sys­tem is very dif­fer­ent from the UK regime.

France also has a type of wealth tax which ap­plies on your world­wide as­sets after the first five years of res­i­dence. Cur­rently the thresh­old is €1,300,000. There are de­duc­tions avail­able, for ex­am­ple you are en­ti­tled to a de­duc­tion of 30% against the value of your main home.


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