hhahhahahah Pato was a name I quickly created for this forum…I never joined a forum before and did not think in a million year I would exchange so many messages already lol.
When I read forums I often see old post dated 2008 for example so I didnt think I would received a reply lol
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Hi Paolo
as you are both EU citizens so no issues with CdS etc in France I would advise you to think carefully before you make any final decisions and consider what you’ve posted as choices you are contemplating, for now.
Just some things:
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do you have any interest in retaining your settlement rights in the UK, is that taken care of. It would be a shame to lose the option, just in case you could need it in later life, if there is anything easy you could do to retain it just in case.
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I believe if it’s not your main residence you will be subject to UK CGT when you sell your house. I believe some people move back into their UK house for a period, after renting before selling.
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If it’s not your main residence when you sell it France will tax you CGT (and possibly other taxes) if the owner at time of sale is resident in France.
You may want to think about which of you is resident where, when, and which of you owns what property, when. We 're talking potentially huge percentages of your increase in value of your house that is crystallised when you sell it.
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Some (“buy to let” type) landlords or “accidental landlords” in the UK have been transferring their properties into Ltd companies due to a raft of unfriendly UK tax changes in recent years. Especially clever ones took advantage of the recent stamp duty holiday to make this process taxfree. But it may well still be worth doing. Jus’ sayin’.
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If more than a certain % of your work is performed in France, even remote working, including for a foreign employer then you and your employer are responsible for all French employment related taxes (and employment regulations generally, as they develop). As you will know those taxes, and particularly various social charges, are relatively heavy in France, partcularly on the employer. You can consider the “independent worker/micro entreprise” type of regime instead up to quite a high sum of earnings, which is less onerous.
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For remote working, social media postings and telecommunications generally, be aware that unlike the UK, France has successfully arranged the legal operation of a “snoopers charter” where all your online use and any communications can legitimately be captured and analysed by various government authorities. I will leave you to imagine which authorities are included.
France’s authorisation for this was hard to obtain, only for about 3-4 years and expires sometime 2022-2024 (I forget when). But it would be in the nature of government for it now to be more easily extended/renewed. So if you’re not remote working, be clear.
- Lastly not wishing to worry you but someone mentioned a UK Ltd might come under something called foreign controlled companies in the UK which might have tax and regulation complications. Triggered apparently if the director becomes resident in another country. I have no idea what this means but they seemed to think it should be looked into.
Karen’s point about UK settlement rights is a great one! I would second the need to check this out.
The other thing you need to check out is whether different rules apply to you re capital gains because you are European citizens, horribly incomprehensible stuff about your place of domicile perhaps not being the same as you place of residence!
I think current rules for non-residents are that you will be exempt from CGT (or get rate relief that equals the tax) while you were resident. You used to have a two year period after you moved out where would still be exempt, but this might have gone. Do check as CGT is high, so need to make sure it’ s worth keeping house
As others have mentioned, it is not as simple as it may first appear to carry on as is with your UK company. Here are some links to help you see various options to make it work legally.
https://www.urssaf.fr/portail/files/live/sites/urssaf/files/documents/5015-GuideCNFE-UK-2017.pdf
Here is a link to a quite comprehensive article regarding setting up a business in France which has links to the various web-sites you’ll need to look at:
Gosh I didnt’ know that!!!
Hi Karen, sorry for the late reply…last few days had so much to do lol…thank you so much for your amazing reply…you took your time and I am extremely grateful.
Will reply to you on each of your answers…
1= We both have have been granted Indefinite Leave in the United Kingdom so I guess we are ok?
2= You are right…if we start our new life in France and rent our home will be subject to CGT when we sell unless we came back to uk for a short period of time when the tenants leave.
I did a lot of research and i learned that UK is extremely fair as they don’t tax CGT the years you lived but only the years you rent while in France they don’t but sadly they will take into account all the years you had the property. Yes they give you a relief after year 5 of 6% for each year and a relief for social charges of roughly 1.75% also for each year.
After doing a basic calculation of what we paid and what will be potentially selling for …well we will still be facing a huge CGT bill even with French tax relief …and also even if they remove the CGT paid in UK simply because they don’t take into account the years that we lived in.
Anyone has done that or aware of this method, means going back to UK when the tenants move out ? I don’t understand how long we will have to came back and if one person is enough prior to sell as a main residence again and avoid CGT in France.
3= Related to previous answer
4= I looked into it but I still have to understand how I can use my limited company to do that…Im the only Director.
5= I understand any remote working in France as a self employed will be taxed in France and I am ok with that…won’t be many hours so will declare but I may have to go back to London few times a year for few weeks and from what I understand I can declare those hours to hrmc thru my company as I normally do as I carried out my work in British soil.
6 My remote work will be connected to live events in UK…
7 I have no issues of anyone looked into my company, as I mentioned before will declare accordingly.
I hope I replied to all your points but I really would like to know from you or anyone else if had similar experience about coming back home for a short period of time ( how long?) after tenants move out so the house will become our main residence again or if anyone knows how to legally use a uk limited company
Not an ideal scenario to come back in Uk if we have established our life in France again…but good to have a realistic legal option
Thank you
Hi oneillk, how are you?
Can I ask you how long you had to came back to the UK to avoid CGT in France ?
Thank you
Long enough to be tax resident in the UK, ie 183 days. However it can be less depending on how you score on the statutory residence test. It all becomes a bit of a complex muddle, as you can be dual tax resident, so will also need ro declare in France. But if this is potentially a substantial sum then do please take professional advice. Seemingly small differences in your personal circumstances can make a big difference. Don’t rely on advice from strangers on a forum unless they say they are a qualified tax adviser with cross-border experience and passporting rights!
And tax is individual in the UK, not by household. So if the house is in joint names then you each pay your share of CGT. Or would each have to qualify for exemption.
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I think your question is to oneillk but I seem to have been pinged…
@JaneJones is right and further i would venture it’s also how long you also need to show you are not tax resident in France - usually at least one tax return year - i.e. have the most recent UK tax return addressed to your property and none in France. . The double tax treaty allows for CGT in France and also the UK - UK will take it from 2015 I recall.
Perhaps ask yourself why be tax resident in France at all before you sell the main UK residence - then problem solved?
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Yes! Simple solutions sometimes best!
JJ Jones I agree with you and I did seek professional advice in France …so many opinion on this matter.
In my case I do not want to sell yet my property and happy to rent it for few years but most website and people suggest me otherwise as I will be paying CGT in France at 36%…plus an extra 6% if the gain is more the 250.000 euro…below will copy and paste the reply I got from a french tax specialist so I hope can help other people but pls as JJones previously said …do seek professional advice as each scenario is different
- According to the UK/France tax treaty (article 6), a property located in the UK is taxable in the UK.
You told me that you will be taxable in the UK on the capital gain upon two years of rental.
Thus, you won’t be taxed in France but in the UK, and you will benefit from a tax credit in France.
But you will be subject to declaratory obligations in France (on the annual tax return+ form 2048-IMM by a notary).
- In consequence, tax to be paid in the UK on the capital gain. Tax credit granted in France
So If I go to France next year I can rent my house and sell it in few years and only paying CGT in UK as will become my secondary home while I rent in France
Many people told me not to rent as I will be taxed in France…
Thank you
sorry im struggling to reply to the right place
i think I mentioned a couple of things you overlooked. You can get around a lot of the problems, since the way you’re going about it you’re going to be massively taxed anyway, by transferring the property, while still resident in UK, into a new Ltd Company that will own and rent it. You get expenses offset. When you sell you will get tax concessions. It’s a solution used by landlords. It also means the income is not yours ( a good thing) till you choose to have it paid to you. You need professional advice though and getting it will save you a lot of money.
I’m also unsure if you spotted my comment followed by the info Tory provided you. If you work in France even just online for your UK co., not just you but your employer (your Ltd) must pay French employment taxes and social charges. Both. Employer social charges are very high. So you will be paying these. There is a % tolerance but it’s not much.
oh ok…did u see the reply of the french tax specialist i posted earlier ? From what she says its fine to rent my uk property while living in France and sell it few years later…will be only paying CGT in UK…so much cheaper then the CGT in France …one thing I forgot to ask was if I still have to pay the 17.5% social charges on the UK capital gain in France anyway…pls read the reply from the french tax specialist
. Your rent the UK property for 2 years and sell it
According to the UK/France tax treaty (article 6), a property located in the UK is taxable in the UK.
You told me that you will be taxable in the UK on the capital gain upon two years of rental.
Thus, you won’t be taxed in France but in the UK, and you will benefit from a tax credit in France.
But you will be subject to declaratory obligations in France (on the annual tax return+ form 2048-IMM by a notary).
- In consequence, tax to be paid in the UK on the capital gain. Tax credit granted in France
She did not mention social charges
thx
thank you
I just did a reply to you via the e-mail 'reply to message button on the e-mail but it hasnt appeared and have no idea where its gone.
To summarise - the % of work ‘allowed’ in france is is 25 - as you actually do work in the UK and you said you’re not teleworking too much maybe you can finesse the percentages - especially if you are not too worried about the healthcover. So as Jane intimated and I should have said, apologies, - perhaps consider whether it is necessary to be tax resident until you sell your property?,
I also just saw your other post also that you are looking to rent your property for a few years. The longer you own the property - even renting it - the more your French CGT goes down (assuming you’re France tax resident) - the more you rent it the more the UK CGT goes up. It’s not fixed percentages. All the rates are published so you can do the calculations. At the end of the day if your rent income is more than the extra CGT you’re ahead?
If you don’t want to pay the France and UK CGT down the line, don’t become french (tax) resident and sell pronto. Hope that helps.
Great but tax french specialist clearly said if I move to France and rent my uk property in uk for 2 years I will be only paying CGT in UK and not in France…im ok with that.
As I already lived in my uk house for 8 years and will be renting for 2 years before selling well under uk CGT rules the proportion is 80/20 means if the gain is 200k…only 40 k will be taxed mines allowance ( 12.300 times 2 as I own the house with my French partner)
Also you cannot live in France and not being a tax french residence
Thank you
Hello Pat99
Goodness, this has been an interesting read…
As far as I can see, you’ve been given a lot of advice and links of one sort or another.
Now you’ll need to make up your own mind whose advice to follow… although not easy sifting through.
You have a broad choice, ranging from folk on the forum to the “french tax specialist” you have consulted elsewhere.
best of luck.
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I might be missing something here ?
What is all the panic?
CGT is exactly that ie. A tax on the gain you make between buying and selling less a % reduction for the number of years you have owned it.
If you sell then what you bought it for is yours and not subject to tax in any way shape or form. Yes, any gain you might make is a profit and subject to tax but of course there is a UK exemption on the first 10k (when I last looked but may be more now) and if joint owned this is effectively doubled as joint owners in UK can each claim their own gain so if the gain is 20k you are still under the tax threshold between you.
So unless you are desperate for the cash invested in your UK property portfolio then keep renting and enjoy the income. Yes you have to declare the rental income both in UK and France ( assuming you are French tax resident) but even after that rental provides a steady income.
Best of all,unlike occupational and old age pension which dies with you your property investment and rental income doesn’t so your childen get the goodies ( or anyone else you chose to leave to)
What’s not to like?
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I agree with @JohnBoy 's post completely, having recently sold up in the UK. The basic premise is that, while rental income is delared in both countries but only taxed in one, due to the double taxation treaty, those exemptions only apply to income NOT capital gains which are taxed in both countries but completely differently (and sometimes waived in France if CGT has been paid in the UK but it’s against the rules and doesn’t always happen.)
The only addition I’d make to John’s post is that, at least last year, the exemption amount in the UK had gone up to £12,300
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Hi
You sent the original email query to me.
As others have said you really need professional advice. The situation may have changed since we sold due to Brexit (we sold in the initial period before Brexit came into force).
From memory, and this might not be accurate, we had to check for any lapses between UK tax years as we paid French taxes in order to join the French health system (we ran a gite to do this.)
We didn’t have problems in our UK residency period as we didn’t have a break and when we realised the issue, whilst still owning a French property we bought a narrow boat with a residential mooring and conformed to the minimum 183 residency rules/tax year for living in the UK whilst waiting to sell our French property. For us, the main point was that we hadn’t even known about this issue and had we stayed in France for a number of years and then sold the UK property we would have had to pay French CGT on something that was not by then our home. Had we made a profit on the French property then we would have been liable for CGT in France, but this was not the case!
But, I can only say please get current financial advice particular to your own circumstances. Good luck.