Finances on Moving to France

Banking & Financial Tax & Social charges
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Hello

I would be interested if anyone is able to share stories or tips of how to arrange financial or other matters on moving to France. We are considering making the move to France but many issues are going round and round and someone may have some thoughts that help to clarify things for us. If anyone can has thoughts on anything below please chip in.

About us: we are both retired (62&69) and have good public service pensions. My husband has a state pension also.

In France we have a second home in the Minervois, since 2019, which is in my name only and might be a little small for life full time. Obviously, we love the area and house for the reasons you will all know. We have made good friends with both English and French speaking local people, despite poor (improving!) French and Covid. We are very out of love with England for reasons which are probably obvious. (My OH is Scottish and neither of us is out love with Scotland)

We are in the process of selling our main home here and will move into a small mortgaged rental we own. We will pay off the mortgage on the rental and want to give our children some of the proceeds. We are well under the French wealth tax level.

Aside from the enormity of the decision and a worry we have left it all a bit late. The tricky questions for us are mainly around our children and grandchildren (4,7,11) who live locally and whether to keep the small rental as a UK base.

Our three grown up children are from previous relationships though we have been very much a family unit for 25 years. My stepson lived with us from age 11 and we wish to treat the three children equally in inheritance terms.

I am more agonised by the idea that us following our dream and moving to France is going to disadvantage them in the future than I am by the possibility that we donā€™t make it work in France and return to UK.

I am aware that this probably sounds very chaotic but if anyone has been in a similar situation before moving to France, Iā€™d be grateful for your views and to learn from your mistakes or successes.

We will, of course, get professional advice for the hard financial stuff but Iā€™ve read quite a lot and it seems that even the professionals give differing advice anything and some things seem unclear even to them!

Thanks in advance to anyone reading/replying to this.

Right off to French lesson now. Have a good day!

Sarah

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Just some thoughts that struck me as I was reading:
Sometimes living in France hasnā€™t worked for our friends, even after being here for 15 + years. Going back without having at least a bolthole is very traumatic because property in France is so much cheaper than the UK, so the money from selling a property in France will not give anything like the same standard of living.
We have kept a property in the UK which is rented and that additional money has been essential at times when our pensions werenā€™t enough.
As you probably realise from having a second home, living in France is expensive and over the years prices have only gone in one direction. Our reasonable pensions have not kept pace with prices and we have needed the income from the gite we have here also to supplement.
There is a difference between a second home and a forever home. We bought a large, substantial second home and then spent the same amount again on bringing it up to scratch - insulation, new wiring, additional bathroom etc etc. Itā€™s still after 14 years not finished and is a money pit.
Making financial plans for the long term for children is a tough one because their own behaviour is not predictable. Better, I would have thought to look at your own lives and your needs and let them live theirs. Maybe that sounds harsh, if so, not meant to be.

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Iā€™m still learning as Brexit and other things meant I am now formally living in France sooner than I expected to be. Although we have had our property 29 years and spent substantial time here and as good as living here for big chunks. Always knew being here would become officially permanent but it came in a rush and officialising things in Covid made it much harder.

Once you become formally resident in France the most important thing seems to be tax. It is absolutely essential to sort out your strategy before you become resident. Income does not seem to be complicated for retirees you just have to declare your worldwide income and be taxed on it. Capital gains need to be managed as you will see from the number of threads on this site from people who find themelves selling property in the UK after they have become resident in France with its multilayered taxes. Income from rental property in the UK must be declared in both countries even if you have officially left.

As regards inheritance the key thing is to keep your domicile, in the English tax meaning not the general French meaning, in the UK if you want UK inheritance law to prevail. Intention to return to the UK one day can be a key part of this and retaining a property in the UK plus youā€™d need a UK bank account would prob be enough.

Tax authorities are voracious though and despite your domicile remaining the UK even though you might be resident in France, practically speaking so far as I can tell your French real estate ā€˜immobilierā€™ property will end up subject to French inheritance tax laws whatever you do. I suspect a separate French will done with your French notaire covering assets in France will make that less complicated. (I have one.) One thing to do if you become resident is to declare tbe property as your main residence to your tax office here. For a few reasons including less onerous tax if you sell it.

I think @SuePJ saw what I did. My gut feeling is you will want the UK to remain your domicile and may indeed return. If I can be direct it sounds like you are moving ā€˜fromā€™ the UK more than ā€˜toā€™ France that kind of adds to this feeling. Fair enough but protect yourself by planning tax and inheritance carefully - the rest you can wing once you settle here.

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New law to take account of Sharia law disadvantaginģ women has affected our ability to use English law to bypass French inheritance rules.

It may be overruled in time, but currently it is in force.

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The first considerations should be healthcare, residency and finance.

Given that the existing French house may not be suitable for a permanent move I do wonder whether a UK/France split coupled with a long stay visa might be less complicated.

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I was wondering similar. As in perhaps try a long stay visa to begin with, particularly to see how the idea of cutting frequent contact with grandchildren sits with you.

Ok we donā€™t want to contemplate another pandemic, but OH couldnā€™t see his children and grandchildren for over 2 years and that was hard for him. They will also develop lives without you, so you will be welcome visitors rather than ā€œgranny round the cornerā€. But keep your UK small place no matter what!

In terms of finance and inheritance, French inheritance doesnā€™t work too well with blended families (ugh word!). But it is fair! However the threshold for tax free inheritance is low, and the inheritance above that very high. So it really depends on what assets you might have when that moment comes. Like you we have adult children/stepchildren, but they are grown and independent. We have helped them to get to this point and if they get nothing else then so be it. For the grandchildren we are using Assurance Vie, which when invested under age 70 gives a big chunk tax free. (We are also looking at a Sterling Assurance Vie at the moment, but this is more complex)

As for the rest, everything is a bit tedious, but easily doable. Your income sounds well above the threshold for a visa, you will need short term health insurance but then can get an S1, so after that your main health costs are covered and it will reduce the tax on your pensions.

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This is untrue. You can make a French will that includes the statement that you wish to use the Brussels IV protocol i.e. to allow the inheritance laws of your country of origin to apply. This gets around the forced succession that French law enforces, but it does NOT get around French inheritance tax.

As an example, a child inheriting from a birth parent has a a large allowance (100 000ā‚¬) before tax (which is then charged at a sliding scale from 5%), but a step child only has an allowance of 1594ā‚¬ before 60% tax is applied.

Any taxes are due 6 months after the inheritance, regardless of whether an asset has been liquidated i.e. leaving a stepchild a one third share of a 300 000ā‚¬ property would mean that they owe the taxman 60 000ā‚¬ six months laterā€¦

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Not anymore (potentially, yet to be tested in courts) because of this anti-discrimination law.

Info in English here, came into force for all deaths after November 2021.

https://www.buckles-law.co.uk/blog/france/proposed-republican-principles-law-in-france-poses-risks-for-british-nationals-planning-their-estate/

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The situation with Sarahā€™s property here is already muddied because it is solely in her name so instantly her husbandā€™s child/children are disadvantaged.

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OK, I had heard about this, but wasnā€™t up to speed with the fact that itā€™s been passed, so thanks for the correction.

Iā€™m still not entirely sure that it completely scuppers Brussels IV; the article seems to suggest that it might only be an issue where a forced heritor (say, a biological child) uses their position to get a bigger share over a step child, against the willed wishes of the deceased parent.

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The problem with immobilier - ie real estate - the clue is in the name. Itā€™s things that are literally immobile ie cannot be moved out of the country.

Is it any wonder the tax regimes of so many countries focus very heavily on taxing land and things like buildings? Because they are immobile, thatā€™s why! Practically speaking the laws of countries seem to evolve so that no matter what, land and buildings, anything nailed to the ground that canā€™t physically be taken outside of their jurisdiction, even if a window opens to relieve tax on those (particularly at inheritance) that window will always close.

Call me a cynic :slight_smile:

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Thanks so much for all your really helpful responses. Just typing the question out and reading your responses has helped to clarify the questions if not all the answers.

At the very least keeping the small UK base seems much clearer to me. I guess the worst of all possible worlds would be not to see in advance of a move and then to do so a few years later.

We will certainly be using Schengen and then a 6 month visa for a year or two while we sell/move/modestly improve here. And thank you Tim and Jane for your views on this. The problem for us with this as a longer term will be keeping to under 182 days in France. We feel as if we are marking time here until we can go back.

Sue PJ thank you and you donā€™t sound harsh just realistic and sensible re offspring. I totally agree that France is not cheap aside from housing, compared to SE England anyway! I canā€™t really say if weā€™d stay til the end, as it were, but if we were to have some good years we can look back without regrets for not having done it and I am sure we will have had an adventure. Sometimes I think Iā€™m not seeing the wood for the tax trees.

Tim, thank you for your helpful comments. Actually healthcare is a pull for me given the relative merits of the NHS and French system. Both my OH and I have the scars, my husband life changingly so, from misdiagnosis/poor treatment here. Some initial PHI and then top up insurance seems a low price for world class healthcare. We werenā€™t too worried about the implications for my step son with the house being in my name only because it was relatively cheap and we felt we could organise the rest of our assets around it. I think youā€™re right about the try it for a while option and you are certainly right about lower levels of complication.

Thank you Karen and you are quite right ā€˜from UKā€™ is a key factor, though we do know other countries quite well and wouldnā€™t really consider living anywhere else but France. It is the Inheritance/blended (urgh) family issues largely. If we were to stay in our little maison secondaire I wouldnā€™t be too worried about the inevitable tax or Inheritance implications because although it super lovely and plenty big enough for a second home and worth about e120k always assuming it hasnā€™t zoomed up in price (joke!), its the UK stuff that does seem alarming. We do need to work all this through prior to any move if we plan to sleep at night and not rely on the stalwart of inheritance tax planning for some people: ā€˜the last one dies in Portugalā€™.

Thanks again to everyone for their comments. Youā€™ve made me look at some things differently or clarified my understanding of others.

About to listen to charlatan Middle White wriggle out of his appallingness yet againā€¦ā€¦

Sarahx

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That is sorted out by the step-parent adopting the adult step-child. Unlike the UK you can adopt adults here.

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Also an issue if one wishes to disinherit a child, or provide for offspring in a less than equal manner.

Do you happen to know if you can adopt step children if the other biological parent is alive? I can look it up, but thought you might know

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Iā€™d be keen to take this option but I am almost certain adopter and the adoptee have to be French nationals or maybe it was residents, any sadly didnā€™t qualify

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My stepfather adopted me, we live in different countries and donā€™t share a nationality (I have dual Fr/UK).

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French resident/UK adult
If the adopted child is under 18, the French jurisdiction would certainly accept to pronounce the adoption whereas if the child is over 18, the French jurisdiction would certainly refuse it because of the rules applicable in the UK.
from Chamberie Notaires/fr

Unfortunately!

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So tedious

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@Bluespacelover What is the Portugal thing you mentioned?

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Hi Sarah! We came with the idea of keeping a foothold in the UK - indeed, we kept 2 houses in the UK (rented out) for nearly 10 years, but sold them both last year, having completely ruled out living anywhere else but France. In our view, there is no comparison between the quality of life here and in the UK (although I agree Scotland is better - but chillier!). The superiority of the French health service alone is reason enough to stay here!

Regarding the issue with French inheritance tax in ā€˜blendedā€™ families - I have a step-daughter from my wifeā€™s first marriage, and we have 3 more children together. We are dealing with this in 2 ways - first, by agreeing in the family that if anything happens to us their inheritance is to be shared equally and, depending on the situation at the time, they might need to find a way to do this; but second, you can effectively take some investments out of the inheritance system altogether, in assurance vie accounts, which can then be passed on tax-free - this will go direct to my step-daughter if my wife dies first or we both die together - so she will receive around her share free of tax anyway - itā€™s a way of approximately evening out the tax differential. Your case will be slightly more complicated, with step-children on both sides, but you get the idea.

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