Buying property in France? Take tax advice early

If you are buying property in France, and/or moving there to live, you should start your tax planning nice and early. Ideally this would be before you buy the property, and before you move there.

If you are already happily living in your new French home, there are still usually steps you can take to improve your tax situation, often considerably so. However it is best if you carry out your tax planning in advance, with professional guidance, to ensure you do not miss out on opportunities to save tax for yourself and your heirs, and that you do not set up arrangements that do not achieve the results you are looking for.

Property ownership

There are various ways of owning property in France. There is personal ownership in sole or joint names. You could have a community marriage contract. You could insert a tontine clause in the French conveyance.

Alternatively you could own the property in an SCI, which is a form of French property-holding company.

The best option for you depends on a number of factors, such as your family situation (for example, where there are unmarried joint owners, children from previous marriages etc); what you are planning to do with your property on death; whether you will be a French or UK tax resident; whether you plan to live in the property or rent it out etc.

So you should take specialist, and personalised, advice, ideally before you sign any paperwork for your new French property.

Tax planning

One of the biggest mistakes people make when moving to France is not being informed enough about French taxation. Many people are unprepared for the impact it can have on their income and wealth.

The French tax regime is completely different to that of the UK, not to mention very detailed and complex, and anyone moving to France or recently arrived needs to be prepared for this. There are various tax traps and many people pay more tax than necessary or get their tax planning wrong because they did not have all the facts or get professional advice. Often it is fixable, but of course getting it right from the outset makes life a lot easier, and often cheaper too.

What is tax-free in the UK is not usually tax-free in France. You will need to review your saving and investment structures, and establish what will be tax efficient in France. This may well mean that you need to move capital from one arrangement to another. The tax burden in France can be high, but it is not necessarily as bad as many expect if you have effective tax planning in place, and income tax can be considerably lower than in the UK.

It is possible to do a lot of research yourself online, but bear in the mind that if you miss out on a key piece of information, it could end up being costly. Also your situation in unique – online articles can only provide general facts and commentary. So you do need to take personalised, expert advice. This will ensure that the tax planning arrangements you use will suit your specific circumstances and objectives.

If you have a UK financial adviser whom you have been using for some time, you may wish to continue to use them. However they are unlikely to be up to date on all intricacies of French taxation and the frequent changes to the tax regime. You need an adviser who is based in France, since living there means they keep on top of all the reforms and have personal experience of French taxation and the financial planning needs of expatriates in France.

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