Wealth Tax

[Will]

Deimos - it seems you are the one posting 'amazing' things. It was me who mentioned the mortgage as an example of one way to take yourself out of the wealth tax bracket. And if you had read further you would see that the way it works, as confirmed by Les Lauriers who is usually spot on about taxation issues, is that the money released is not just put somewhere else where it would get counted for wealth tax, but re-invested in something that enjoys tax breaks, like forestry, social housing, fine art etc.

And we are all agreed on the necessity of using a decent accountant.

And the fact that it's not really that big a deal, if you are a euro millionaire then the extra thousand per year in tax isn't going to bankrupt you.

[candide]

If you are a UK citizen and tax-payer, with just a holiday house in France which you visit 4 or 5 times a year, would this French wealth tax affect you?

[Will]

I imagine only if the value of your holiday home plus any other immovable assets held in France is high enough to take you into the wealth tax bracket, and then, as a non-resident, you would pay the tax on what is in France rather than your worldwide assets. At least that's the principle applied for most things in France and I can't imagine wealth tax being treated a lot differently.

[candide]

Thank you.  That's a relief.  French assets are not worth much.   

[Deimos]

[quote user="Quillan"]

Good grief Ian just go back and read my posts properly I'm not going to explain more than three times.

[/quote]

Apologies, I missed your subsequent post and my advice was actually as received by an accountant.

I was actually amazed at the bit

[quote user="Quillan"]

I think, but I might be wrong, that it's something to do with Tax Froncier (probably spelt it wrong) which I think is based either on the prperty value or the rentable value which in turn relates to the property value....

[/quote]

and wondered where you had got it from.

[quote user="Quillan"]

... all I can do is rely on what I read on the subject so if the information is not correct in Living France take it up with them and don’t have a go at me.[/quote]

Was this a Living France thing that started the link with "Tax Froncier" ?

Before I moved to France I purchased some of the famous books on moving/living/etc. to/in France and found a lot of what they said to be pretty inaccurate. This is actually a real nuisance as one starts assuming they are right (decently researched) and rather than starting off "not knowing" you actually start off with the wrong information !!

Similarly,

[quote user="Will "]

In actual fact, for most, apart from the very wealthy to whom it is probably insignificant anyway, it is not difficult to avoid with the help of a decent accountant. Simple moves like raising a mortgage on your most expensive house can provide a way out of the wealth tax bracket.

[/quote]

again sorry. I did not appreciate from what you had said that you were proposing other exempt tax schemes for the capital raised from taking out a mortgage. and clearly not alone in making this assumption about what you wrote as per Quillan's response.

[quote user="Quillan"]

... So to raise a mortgage does not get you out of it because what do you do with the money raised, it will still be counted (in full or part) one way or the other.[/quote]

Will, you are right about non-residents. Only those relevant assets in France are counted.

Things may change a bit in 2007 (maybe - I'm not sure as the the status). It may happen that British people living in France may only have to count their French assets for wealth tax for their 1st 5 years. Only after this "holiday period" will worldwide assets then have to be counted. I guess an accountant will know what may be happening about this.

Ian

[Quillan]

I totally agree about the books Ian and when you know they are wrong its very hard to get that over to people who believe what they have read. But then are they wrong? We all have learnt I think that one region or department can interpret the law differently from an other and it might be that the person doing the research has only printed what he/she was told.

The bigger problem with books is that it's difficult for them to keep up to date as things seem to happen very quickly here. You would like to think however that 'specialists' who charge for their advice and write in magazines would be right but again I think thats not always true.

[Sunday Driver]

There is so much misinformation floating around in specialist books and magazine articles (and on internet forums!) so if someone wants to know the position on something like wealth tax, the only reliable source is the French Impots. It's all explained on their website in simple, easy to understand terms.  French tax law is the same throughout France, so individual French tax offices can't apply their own regional interpretations.

 

 

[Alan Zoff]

[quote user="Deimos"][quote user="Alan Zoff"]

 I can well imagine that a property retained in the UK will often be regarded, to all intents and purposes, as the "pension".

[/quote]

But probably not by the French taxman

Ian

[/quote]

Might be worth checking out with the authorities/a French accountant, though. If the pension scheme is validly created, it's a pension scheme, regardless of what it holds. Would need to check any other implications of the property passing from direct ownership to a pension fund. There's often some trade-off with things of this nature.  

[allanb]

What exactly do people mean when they talk about "a pension pot"?

Suppose that I have €1,000,000 in invested funds (I should be so lucky!) which would be enough to buy an annuity of about €60,000.  Suppose that you have no actual funds, but you have a pension entitlement of €60,000 a year.  Obviously your financial position and mine are roughly the same. 

Do we both have "a pension pot" worth about a million?  Assuming that we are both resident in France, would we each pay about the same in French wealth tax?

[Alan Zoff]

I imagine it would depend on whether or not the 1,000,000 was locked in to the pension so that you could not spend the capital freely. There are tight restrictions on what can be done with money in a pension scheme. So it OUGHT to receive the same treatment as an annuity already providing an income - but whether it does or not under French wealth tax rules you should (as someone has recommended a number of times) ask a specialist. Just seems sensible to me to consider all the options before coughing up the tax.

[smudger]

Put that in your pipe and smoke it, Buleven Ferengis.

[Sunday Driver]

I don't think the tax authorities are content to rely on the honesty of us folk. The biggest giveaway in any financial investigation is your lifestyle. Everytime you purchase an asset, you leave a financial papertrail.  Everytime you jet off to your Barbadian property, you buy airline tickets using your credit card.  When you pay your Barbidian property tax or UK council tax, yacht mooring fees etc, etc....

Penalties for mis-declaration?  Late payment interest of 0.75% per month (9% p.a.) calculated on the amount of tax underpaid plus a penalty of 40% of the tax is added. If the taxpayer is found to have acted fraudulently a further fine of up to €37,500 is imposed and a maximum 5 year prison sentence.

These penalties can be mitigated by cooperation....[;-)]

Finally, if you meet the French residency criteria (eg, your principal residence is in France, your family live here etc) then you are considered to be tax resident in France and are obliged to submit a tax declaration.  Your income will, however, remain taxable in the UK under the UK/France double taxation treaty. That means, as a French tax resident, you will be liable to wealth tax on all of your worldwide assets.  You can find confirmation of your tax status by reference to the critera which are published on the impots.fr website.

 

[smudger]

Yeah but, no but, but does anyone personally know anyone who has actually paid it?

[allanb]

[quote user="Alan Zoff"]I imagine it would depend on whether or not the 1,000,000 was locked in to the pension so that you could not spend the capital freely. [/quote]Indeed, it might.  It has been said in this thread that taking a mortgage loan on your house wouldn't reduce your taxable wealth, because the proceeds of the loan would still be part of your assets.  But what if you use the loan to buy an annuity?  If the annuity isn't counted as an asset, then you would have succeeded in reducing your taxable wealth while still getting some financial benefit - which you might not get from antiques or other allegedly exempt assets.

Since (unfortunately) I don't have this problem, I'm not going to pay an expert to tell me the answer.  But it would be interesting if there is someone on the forum who already knows.

[Deimos]

[quote user="smudger"]
Yeah but, no but, but does anyone personally know anyone who has actually paid it?
[/quote]

Yes

[Sunday Driver]

I'm not going to admit to having paid it - this thread is just a scam to find out who the rich people are so they can be burgled....[;-)]

 

 

[Deimos]

Ah, but the question was "does anybody know anybody that has paid it" and not "has anybody here paid it"

Ian

[Cassis]

In that case, yes as well.