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Getting to grips with French taxation


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Perhaps the dream of retiring to France is fading - Brexit, cost of living, access to healthcare etc all seems to be getting worse form my early retiree point of view. But I did want to try and establish what potential liabilities I may face before deciding to take the plunge. This is not about avoiding / evading taxes, but trying to get a picture of what costs I may face which will greatly influence any decision to move to the country. After all, I've built up my life savings, paid tax and NI all my life, own a house etc and I do not want to, unnecessarily, sacrifice thousands, or even tens of thousands of my retirement funds without proper cause.

So I thought I would start by asking questions about;

1) Wealth Tax

As I understand it there is a threshold of €1.3m (although tax then starts at €800k) per household, which I think would exempt me straight away. But what is assessed as wealth ? Am I right in thinking that, for French residents, this is all real estate worldwide but not other assets. Even then there seems to be a 30% discount applied to the main residence.

For non-Residents it is only real estate in France that is counted and the same discount applies.

As an example;

French Resident couple

House in Dordogne at €270k

House in UK  at €300k

Savings and other assets €700k

Pension pots €350k

State pension ?

Only the properties are assessed at €300k + €183k (270 less 30% discount) so no wealth tax payable.

As non residents the only liability would be 70% of the house in the Dordogne. Again, no wealth tax.

One thing worries me though and that is possible capital gains tax on sale of a UK property. If we became French residents, owned a French house, and then decided to sell out UK house might we face a large capital gains tax bill on it sale as it has doubled in value over the 17 years we have owned it ?

Comments welcome (and then I will move onto income tax !)

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Could be wrong but I thought that the 1.3m threshold you are quoting applied to the old wealth tax ISF (impôt sur fortune), which was based on your entire estate, ie the total possessions of all members of the fiscal household.

I think that as of 2018 this is replaced by the brand new property wealth tax IFI (impôt sur fortune immobilier) but AFAIK no threshold has been set for that, and probably won't be announced until next year when people declare their situation during 2018.

I think that's the gist although I don't know any details beyond that.
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