Capital gains tax

[jessycat]

Hi all

Can anyone give me any heads up on whether I have to pay the equivalent of CGT in France on a property sold in the UK?

I live and pay tax in France, and the Uk property (secondary) was sold in the tax year after that which I left UK. I have been advised that I don't have to pay CGT in the UK as long as I don't return to Uk tax system for a certain no of years.

I have read that there used to be a loophole meaning that in my situation I would not need to pay the equivalent in France - but don't know if this has been closed. Can anyone advise, or recommend an accountant who works in both countries that could  help (not too expensive - quotes received so far are astronomical!)

Thanks!

J

[Gluestick]

Before you left the UK what was the status of your  UK property? Your principal residence?

What was the date and year on which you permanently left the UK?

Did you thereafter move straight to France?

After you moved to France, was your UK house let for market rental? Or was it empty? Did you instruct agents or make other robust moves to sell the UK house prior to and/or immediately after you moved to France?

From what date were you tax resident in France? (Date of registration with ALL French authorities, fiscal, CPAM)?

 

[Will]

All the questions asked by Gluestick are relevant. Because of the double taxation agreement you should not, in theory, pay tax twice over on the same amount, but on the other hand, you should pay it somewhere. Complications come in if you are French resident and the tax you pay in Britain is less than you would be liable for in France - in that case the principles behind the agreements allow your current country to collect the difference. Think of it as the tax you pay in Britain being offset against your French liability, rather than replacing it.

Capital gains are a minefield, because the systems are so different in each country. What has tended to happen up to now in many cases is that if you have not had to pay CGT in Britain, you do not pay in France either. Britain gives you up to 5 years after leaving the country to sell what was your principal residence, and also allows you to have nearly £9000 worth of capital gains before you start paying tax. France offers neither of these concessions. So the double taxation agreement is being changed, and in the new version you probably will have a French tax liability. But the introduction of this new agreement keeps getting put off, and as far as I know it may still have not come into force, although it should be imminent.

So timing is critical. It sounds as if you should not have to pay additional tax in France, but without the relevant dates etc it is impossible to say.

I hope you can follow some of that, it is a very complicated subject and if you are in doubt you really should consult a tax professional.

[avinalarf]

Based on the information supplied there will be no liability as long as you stay non-resident for five years.  If you return before then there may be a liability depending on whether or not the house has always been your main residence.  Nothing to declare.  Personally, I wouldn't take further professional advice. 

[Gluestick]

Jessycat:

Once you answer the various questions I posed earlier, I will be able to provide some First Level advice, as I am accountant, in public practice in the UK.

Any advice, of course, will be pro bono and no liability attaching etc.

If I feel you need to consult a professional adviser, then I would, of course, recommend this course of action.

Serendipidy (or summat?[blink]) that I  finalising a fairly complex CGT case today.

As has been stated, CGT can be a very complex issue: once a taxpayer crosses a border then potentially, it becomes even more complex.

 

[Will]

And Mrs Will used to teach inland revenue staf in London (capital gains was her specialist subject), and is now involved, in France, in house sales - so the subject still comes up fequently. You will need to get the current UK situation from Gluestick or another accountant, but you have to believe me that it can get very involved. Even tax inspectors have a lot of difficulty with it. You may satisfy yourself that you will not have tax to pay, and as I said this seems the most likely outcome, but if there is any doubt then it is far better to talk to somebody qualified to give advice rather than believe what you read on the forums (we could all be imposters, after all) or stick your head in the sand, as too many people do.

[avinalarf]

Under the terms of the current UK France tax treaty the gain on the sale of a UK property is taxable in the UK.  As you were non-resident when it was sold and if you remain such for at least five years then you have no liability - that is the loophole to which you refer.  Whether or not you rented it out after leaving the UK makes no difference.  The new treaty closes the loophole by making the gain taxable in France, but it is not yet ratified and cannot apply retrospectively.  I am as professionally qualified as other authors.  If you are concerned you could seek confirmation with your french tax office.  I would then only engage a tax lawyer if the french taxman comes after you with a different interpretation.

[tarncat]

 Does anyone know if the new treaty has been ratified yet?

We live full time in our 'principal residence' and pay taxes in France. The UK tax office has confirmed we would have no UK CGT liability on the sale of our UK property (currently occupied by my mother-in-law who is about to go into sheltered accommodation) as long as we are out of the UK for five years (specifically April to April). We just need to know if we would have a tax liability in France?

Thanks in advance for any information.

[Berlioz]

Does anyone know if this treaty has been ratified yet?  I have been searching the web all afternoon HMRC, google, previous postings but cannot find the answer.  A lot of IR links appear to be out of date.