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Anglo/French tax ratification?


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Following advice I've seen or been given, I have been in contact with a firm of professional financial advisors regarding our planned retirement to France. Even though our this won't take place until summer 2006, everything I've read has suggested that an early start on investment planning for French tax etc is worthwhile. I had an interesting conversation with someone from this company today which basically concluded that due to Anglo/French ratification of tax issues expected in January 2006, there is no point making early plans as "everything is going to change anyway"!

Can anyone help to: (a) confirm this Anglo/French ratification; (b) confirm that it is "going to change everything"; (c) give me an idea of what "everything" might be; (d) suggest another firm of financial consultants who will confirm or deny same; and finally (e) tell me if you think these firms feel that anyone with less than £1m is too small to take on!

Best wishes

Linda

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Linda

I can't give you chapter and verse because sadly the details of the proposed change were buried in an Inland Revenue bulletin early this year and I can no longer track down the exact wording,..however if you have time and inclination it was covered on the UK IRs website, if you have time you could find it, though the IRs search function isn't brilliant.

To try and answer your queries (this all comes with the caveat that this is as I understand the changes):

Yes, the agreement is being rewritten.  It has not yet passed through the French system for ratification - it may be ratified in time for the French Tax year beginning Jan 2005.  From memory the general idea was that any UK Nationals resident in France would be subject, fully, to the French system.

I know of one Financial Advisor (French based) working on this issue for a group of expats and the expert's opinion is that nobody knows the "everything" or "anything", we will only know the details when the French finally ratify.

 

 

 

    

 

 

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The dual taxation agreement is mentioned in the inland revenue bulletin number 72, it helpfully refers you to this web page for the details

http://www.inlandrevenue.gov.uk/pdfs/uk/france_dtconvention.pdf

 

Unhelpfully the link appears not to work!

 

BJSLIV gives the link for detail regarding UK property and, depending upon the circumstances, this will either be good news or bad!

 

I would guess (and it is only a guess) that the long term aim is for tax to be paid in the country where you are tax resident, why should another government benefit from taxing non residents on bank interest for example – I can see no sensible reason from a governments perspective. However I suspect that governments will wish to retain their right to tax government funded pensions.

 

The European directive on the taxation of savings introduces withholding taxes on a rising scale to 35% on interest paid to non residents, with 75% of the tax withheld going to the country of residence. Clearly the 35% rate will be punitive to most taxpayers and this will encourage declaration in the country of residence. Presumably the idea is also to end the use of offshore savings accounts as a means of avoiding tax.

 

It is extremely disappointing to hear that you did not gain much assistance from the advisors you approached. Indeed it seems you were left with more questions than answers! I strongly believe that there is much that can be done to arrange your finances prior to becoming French resident, despite what you have been told, but then again I do not know the details of your own situation.

 

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Many thanks for the replies and links.

I've contacted the original advisers and asked for clarification and have also sent a general query to another firm of advisers. Let's see if double opinion can agree! I'll keep you informed.

 

Thanks again

Linda

 

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Before moving out I contacted some specialist advisers (who regularly advertise) – on several occasions. Despite their advertising about planning for everything early and despite me being quite prepared to pay for advice, they never actually managed to give me any advice . It was always “contact us nearer the time” and now I’ve moved. Having said that, once I had sold my UK property and had booked the removals company, they did then send me a standard IFA “personal assessment” form.
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