Jump to content

A question for CGT experts


woolybanana
 Share

Recommended Posts

A chum of mine wants to return to the UK after being tax resident in France for yonks and is concerned about getting stung for CGT on his share dealing profits. (I wish I could invest as he does as he seems to make a mint out of the market.)

Anyway, he has, so he tells me, several shares which are showing very healthy profits indeed and clearly if he realises those profits whilst he is a French tax resident, he would be liable for tax and social security charges in France.

BUT, he aksed me what would happen if he only realised his profits after he returned to the UK, would he be liable to UK CGT, given that he was tax resident in France when the gains were made.

In other words, would the money he has made be treated as having been made abroad by a non-resident and therefore outside the grasp of the UK tax people?

Hope that makes sense somehow. I havent a clue as working out prices per kg is about all I can do, and that is a Mathematical strain.

Gluestick perhaps might have the answers.
Link to comment
Share on other sites

My understanding is that having been resident in France won't make any difference as there is no exemption that relates to that circumstance.  CGT gains are only ever relevant at the point of disposal of the asset; he will have to pay tax on the gains either in France or UK and can't avoid the taxation of these (or a portion of them) simply because he was non-resident.  He's best off deciding which regime, French or UK, offers the the least worse option, and going with that. Depending on when or if he becomes a UK tax resident, he could sell part of his investments just before the end of the tax year and more in the new tax year.  There is also the option of gifting shares to a spouse or civil partner and they can then make the sale, thereby giving two capital gains tax allowances rather than one (roughly £10k pa each).  There are various things like EIS and VCT that you can defer capital gains into, but these usually have a much higher risk associated with them compared to more run of the mill shares, and have all sorts of other conditions around them.  Perhaps if he is making so much from investing, he could invest a little of his profits in some expert advice?

Link to comment
Share on other sites

If i remember rightly the CGT law was changed not long ago because the rich french residents were leaving and there was no CGT. So they introduced a law that under certain circumstances CGT would be charged on profits at the time of departure even if sales were not made. Profit latent. Unless the assets were held for a certain period after. But certainly when i left the uk there was no cgt on assets held at the time of going and the same rule applied in france at that time. I have not checked but I think the new french rules only apply if you are subject to ISF.

Sorry if imprcise but its too sunny to go and check.

JFB

Link to comment
Share on other sites

Wooly:

Already stated, but worth repeating. A Capital Gain "crystallises" at the point of disposal. i.e. sale, or even gift.Ergo, until the absolute point of value achieved, no gain has been created. (Some fiscal jurisdictions impose wealth tax, of course and this will always be on current assessed value).

Now, all EU residents  enjoy free movement rights over capital between states (In the UK, for example, the 1948 Exchange control Act was repealed by Thatcher in 1979). However, the first matter to be checked is whether France imposes Capital Transfer Tax on such assets? I do not know the current answer to this one.

If the total value of this man's (might be a women, of course!) assets is significant, then personally, between leaving fiscal residence in France and prior to taking up UK residence and domicile and thus fiscal residence again, I would perhaps enjoy a short two week holiday in Luxembourg and set up a non-resident trust..........and vest the shares in the trust. In transit between France and UK, the person is a traveller of no fixed fiscal abode.

Just a thought........

[Www]

Link to comment
Share on other sites

Loads of ways to do it, Mint.

Set up a Lichtenstein  Anstart: register a limited company using bearer shares, with a nominal, shareholding held by the lawyer/account forming it and say two secretaries. Now, the bright (and most useful aspect!) about Bearer Shares, is no one actually knows who owns the company; and controls it!

Etc.

The core fact to remember is this: once a person walks back into the UK jurisdiction, then they got yer!

I used to be deeply involved in all this, years ago since I was FD of a international trading and commodity broking/shipping house in the City, in another life some 30 odd years ago....

The case concerning the late David Niven was an excellent exemplar and sobering lesson; he gave up a promising Hollywood career, returned to the UK to volunteer for the Army (He had earlier been an officer based in Malta) and to fight the Brownie Pack ( Edit: My goodness! not allowed to write the word which means the National Socialist Party of Hitler's Germany! Sigh........) threat.

After a "Good War", where he finished up a Colonel in Intelligence in France and Germany in the post-invasion "clearing up", he and his first wife, Primmy wanted to return to California, for Niven to pick up his movie career. However, in those far off days, before one could embark to leave, one needed agreement from HM Inland revenue and a clearance certificate!.(Bit like Barbados; one needs to pay "Exit Tax" to leave after hols! Mrs G and I were astounded and rather angry, considering all the hard dosh we had injected into the Bajan economy whilst there for two weeks! However no exit tax; no leave); Inland Revenue then set out to tax Niven on all the money he had earned in Hollywood, pre-war and when resident in America! The senior tax inspector was utterly immune to Niven's returning to the land of his fathers as a patriot to fight!

Apparently he said "No one asked you to return!".

Bit of an object lesson herein, then........

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...