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August 30, 2007

Need to brush up on your French ?

I used this site before I moved over and its great for basic vocab and the the verbs that you will need to get by, but its also good if you already have some knowledge but just don't speak to anyone French that often !

www.frenchassistant.com - Its free unless you want the sound which is €8 per Qtr or €23 per year...

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August 01, 2007

How do the recent changes in the Inheritance/Gift Tax law affect me?

On the 13th July 2007 a new law which is being introduced from 1st January 2008 makes considerable changes to existing French Inheritance/Gift Tax Laws has been adopted be the French parliament.

What does it change?


  • Inheritance Tax between married couples and those with a PACs (Pacte Civil de Solidarité) agreement on first death will no longer be applicable, before limit was set at €76,000 for married couples and €57,000 for PACs partners.
  • The allowance for children & parents of the deceased has now been increased from €50,000 (per child) to €150,000 (per child)
  • Brothers & sisters of the deceased can now receive €15,000 each before Inheritance tax.
  • Nephews & nieces of the deceased will also now be able to receive €5,000 each before Inheritance tax.
  • No Inheritance Tax between Brothers & Sisters who reside at the same address.
  • Limit of the amount that can be left to a disabled person who is not a direct heir has been changed from €50,000 to €150,000.
  • It is now possible under the new Gift Tax laws to donate €150,000 per child every 6 years without incurring any Gift Tax.
  • You are also able to donate €30,000 to a member of family (from their 18th Birthday) without incurring any Gift Tax.

What has not changed?
In France, assets pass according to French succession law rather than by will, and this favours any children of the deceased rather than the spouse (between 50% and 75% of the deceased’s assets must pass to the children). PACS partners and unmarried partners have even fewer rights to the property. This can be circumvented, but if no action is taken to provide for the spouse, they are only entitled to 25% as of right. Any unreserved balance can be left according to your will. For UK residents, this rule will apply to the French property only; if you are French resident, it applies to your worldwide assets, except for real estate situated outside France.

Where assets are taxed in both countries,
under the UK/France inheritance tax treaty, tax should be paid in the country where the property is located, and you can offset this against the tax due in the country of residence to avoid double taxation, even though the UK taxes the estate and the French tax the recipient.


If you are French resident, from a UK point of view, you will be regarded as if you were domiciled in France, because of the UK/France treaty mentioned above. Therefore, only your UK assets will be subject to UK inheritance tax, with an appropriate double tax credit in France for any UK tax paid.

If you are UK resident and domiciled and own a property in France, the French property will be subject to UK IHT as part of your estate, and as it is located in France, it will also be subject to French succession tax, with an appropriate tax credit in the UK.


A few amendments to this law have already been proposed, and these details were only correct at the time of writing. The information is only provided as a guide and, if you need assistance in this area you are strongly advised to seek the help of a specialist in this field as each individual case is different.


If you have a question, want to arrange for a free financial review or just want further information I can be contacted on +33 (0)325461631 or at Steve@financialexpat.com  


Financial Expat is registered and licensed in France under the European wide “umbrella group” of TSG insurance Services (The Spectrum IFA Group).

TSG Insurance Services S.A.R.L.
Siège Social: 34 Bd des Italiens, 75009 Paris
« Société de Courtage d'assurances » R.C.S. Paris B 447 609 108 (2003B04384)
Numéro d'immatriculation 07 025 332 -
www.orias.fr
 

Source - www.mon-epargne.com

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How is the new Mortgage Tax Relief law going to work?

As promised Nicolas Sarkosy's government announced on the 12th July 2007, that the proposed Tax Relief on Mortgage Interest law had been passed. 

Who benefits ?
The most import point concerning this new law is that you are only eligible if the property concerned is your main residence, and that the Act de Vente was not signed before the 6th May 2007. If you meet these two criteria then you will be entitled to a reimbursement of up to 20% of the interest paid on your mortgage against your Income tax bill. 
  • Tax Relief only applies to the first 5 years of your mortgage.
  • Applies whether you are buying a house/apartment or building a house.
  • Is available for 1st time buyers and existing home owners who are buying a new main residence
  • Maximum reimbursement available for a mortgage in a single name is 3,750€ over 5 years (€750 per annum)
  • If the mortgage is in joint names then the maximum reimbursement is 7,500€ over 5 years (€1,500per annum)
  • There is also the possibility of additional sum of a maximum of 500€ over 5 years (€100 per annum), for each person residing within your main residence for whom you officially have financial responsibility for i.e. Children, Parents. With regards to children where the parents are divorced and have joint access the maximum available would be 250€ per child over 5 years (50€ per annum)


For a breakdown of how this will effect a mortgage of €100,000 and €200,000 visit http://www.cbanque.com/credit/interets-emprunts.php (In French but tables are easy to understand) Unfortunately as stated this is not retrospective, but if you are in the process of buying your main residence make sure you check with your French lender that you are getting the benefit.
This law already has a few proposed amendments, and these details were only correct at the time of writing. Information is only provided as a guide and, if you need assistance in this area you are strongly advised to seek the help of a specialist in this field as each individual case is different.
 

If you have a question, want to arrange for a free financial review or just want further information I can be contacted on +33 (0)325461631 or at Steve@financialexpat.com  


Financial Expat is registered and licensed in France under the European wide “umbrella group” of TSG insurance Services (The Spectrum IFA Group).

TSG Insurance Services S.A.R.L.
Siège Social: 34 Bd des Italiens, 75009 Paris
« Société de Courtage d'assurances » R.C.S. Paris B 447 609 108 (2003B04384)
Numéro d'immatriculation 07 025 332 -
www.orias.fr
Source - www.cbanque.com

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What is Assurance Vie, and what are the advantages ?

Assurance Vie is a type of Life Insurance scheme where you can invest in a huge range of different managed funds, enabling you to invest very tax efficiently in France.
                                                  
From an inheritance tax point of view a policy is of greater benefit if it is started before becoming tax resident in France, because it will then be completely free from French succession tax. Unless the life assured is over the age of 70 at the time the policy was set up, or at the time any top-ups are made.

But even if the Assurance Vie is arranged after you have become French resident, for any named beneficiaries to the policy payments in the event of death there’s a succession tax exemption of €152,500 per beneficiary, after which a flat-rate tax of just 20% normally applies.
Assurance Vie can also help with Wealth tax as you may be eligible to not pay wealth tax (depending on your nationality) on the fund for up to 5 years, if the policy is French tax approved but remains outside of France.
French capital gains and income tax does not apply if the income and gains are made within the policy and no withdrawals are made. Even where an amount is withdrawn only the growth element is taxable, for example if your portfolio of assets held within the policy has grown by 5% only this percentage of the withdrawal would be taxable, the remaining 95% would be tax-free. Any gains are liable to 'social charges' of 11% when they are drawn down, plus taxation on a sliding scale depending on how long the policy has been in force, 35% for a policy less than 4 years old, 15% for policies between 4 & 8 years old and then 7.5% for all policies over 8 years old. Then you have the choice of having the applicable tax deducted 'at source', or being paid gross and declaring the gains on your tax return. This is obviously advantageous if you are paying less than this rate of tax. Also after 8 years, there is an annual tax-free allowance of 4,600 euros (single person) or 9,200 euros (married couple) of GAINS. So the 7.5% tax would not apply if you staggered the withdrawals (e.g. to supplement your pension).


If you have a question, want to arrange for a free financial review or just want further information I can be contacted on +33 (0)325461631 or at Steve@financialexpat.com 


Each individual case is different and you are strongly advised to seek the help of a specialist in this field. At Spectrum IFA Group, our advisors are trained in this area and will be able to provide you with free, impartial advice, relevant to your particular case.


Financial Expat is registered and licensed in France under the European wide “umbrella group” of TSG insurance Services (The Spectrum IFA Group).

TSG Insurance Services S.A.R.L.
Siège Social: 34 Bd des Italiens, 75009 Paris
« Société de Courtage d'assurances » R.C.S. Paris B 447 609 108 (2003B04384)
Numéro d'immatriculation 07 025 332 -
www.orias.fr

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