mascamps.com Posted February 8, 2006 Share Posted February 8, 2006 Does anyone know if the new tax treaty is in place and if not, roughly when it will kick in?(It's the one that taxes capital gains in the country of residence rather than where a property is located) Arnold Link to comment Share on other sites More sharing options...
Cat Posted February 8, 2006 Share Posted February 8, 2006 Arnold, it has been delayed due to revisions, and not now expected to come into force until 2007. The wording of the proposed treaty can be found here http://www.hmrc.gov.uk/international/france.pdfThe current treaty can be found here http://www.hmrc.gov.uk/international/consolidated-france-uk-dtc.rtf Link to comment Share on other sites More sharing options...
Brilec Posted February 8, 2006 Share Posted February 8, 2006 From reading these quickly, it appears that currently French levied CGT is not included in the agreement, but will in the future one.Since very few French nationals have a residence secondaire in the UK it seems to me that France will be losing out here, which might account for the delay.Also, as I currently understand it, French CGT is levied at 16%, but in the UK it is 30%? So if you get to be charged in the UK for selling your French house, you will be far worse off.But then, I might have completely misunderstood the whole thing. Link to comment Share on other sites More sharing options...
mascamps.com Posted February 8, 2006 Author Share Posted February 8, 2006 True re the level of French CGT. However, the big difference is that if you are selling your home in France and moving to the UK (as friends of ours are doing), then if the new tax treaty (or, more importantly, the CGT aspect of it) was in force at the time, then they would have nothing to pay (because it is their principal residence) vs 16% in France.Interestingly, it would also possible for them to subsequently sell their UK house (which they kept but rented out) also without CGT as UK law allows you to work abroad and retain your UK home, essentially as your second "principal residence" in terms of CGT. Arnold Link to comment Share on other sites More sharing options...
Baz Posted February 8, 2006 Share Posted February 8, 2006 [quote user="Brilec"]Also, as I currently understand it, French CGT is levied at 16%, but in the UK it is 30%? So if you get to be charged in the UK for selling your French house, you will be far worse off.[/quote]The UK does not have a CGT rate of 30%. The rate of UK CGT you will have to pay depends on the level of your income liable to income tax. The 3 band rates are 10%, 20% and 40% and of course you have your annual allowance, indexation and possible tapered relief to set against the gains. So CGT in the UK for selling your French house could well be nil especially if the property was in joint names as each individual has an annual allowance.Baz Link to comment Share on other sites More sharing options...
mascamps.com Posted February 8, 2006 Author Share Posted February 8, 2006 Not sure how they own the house but I think it's safe to say that if tax is potentially payable, it'll be 100k or more, hence the interest in potentially getting it under the new tax treaty.Indexation doesn't apply any more, or at least not to things bought more than a few years ago (pre 1998? not sure of the year). Arnold Link to comment Share on other sites More sharing options...
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