Clé France

A comparative overview of capital gains tax for non-residents in France and UK

Since reforms taken by the French government in 2012, France has been seen by international property investors as being not tax friendly in comparison with the UK.

In addition to a capital gains tax (CGT) of 19%, non-residents had to pay in addition social charges (15.5%) making the tax bill an overall 34.5% of the net gains. Until recently, non-UK residents did not have to pay CGT on the disposal of their UK property, making the UK a primal choice for international investors.

The above tax overview has since changed.

Fortunately for French property investors, the European Court of Justice has sanctioned the French tax regime entailing a cumulative application of social security legislation of two Member States. The court ruled on the 26th February 2015 that this tax accumulation is contrary to European law, and therefore prohibited between Member States (European Regulation no 1408/71 whose purpose is to ensure the freedom of workers within EU).

Following this court ruling, we are expecting soon the French government to remove the taxation of social charges on non-residents.

Since the 1st January 2015, France has also fixed its CGT rate at 19% for all property owners, whether they are residing in EU or outside EU. Until the 31st December 2014, property owners, residing outside EU, Lichtenstein, Island or Norway had to pay a special CGT rate of 33.33%. This tax reduction only applies for individual owners. The rate remains at 33.33% for companies.

In UK, since 6 April 2015, non-UK resident persons (including individuals, trustees, personal representatives and certain closely-held companies), are subject to CGT on disposals of UK residential property. Non-resident individuals are now subject to CGT at the same rates as UK-resident individuals.

The following CGT rates apply in UK on non-residents:

18% or 28% (depending on the level of incomes) for individuals on gains above the annual exempt amount (the annual exemption for 2015/16 is £11,100)

28% for trustees or for personal representatives of someone who has died who is non-resident

20% for companies

Unlike the UK, France offers tapered reliefs to individual depending on the length of time the property was owned. Individual are exempt from CGT after 22 years. Tapered reliefs start from the 6th year of ownership, as follows:

No allowance for the first 5 years of ownership.

Between 6 and 21 years of ownership: 6% allowance per year.

For the final 22nd year of ownership: 4% allowance.

In conclusion, after the recent EU court ruling sanctioning the taxation of social charges on non-residents and the extension of CGT to non-residents in UK, the French tax regime for non- residents has become more competitive within the overseas property market and therefore attractive for international investors.

The golden rule for property investments will always remain “location, location, location!” but non-residents willing to invest in property in UK or France should take legal and tax advice  after taking consideration of their personal situation, the country of their residence (UK and France have indeed special rules to establish in which country an individual is a tax resident) and existing double taxation treaties.

Francophile legal Consulting can assist you with international property matters. For more information on this topic, please do not hesitate to contact Loic Raboteau, managing director by completing the form below.

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A little more about FRANCOphile Legal Consulting Ltd.

The company was created in response to the need of legal experts for international private clients and businesses. People are no longer confined within their own country boundaries to work, create a business or purchase assets. National, international laws and new technology have enabled people and businesses to move and expand internationally, creating a demand to resolve cross-border issues.

We are a London-based legal consultancy company dedicated to addressing our clients’ international needs. Whether you are a private individual moving or investing in a foreign country, an entrepreneur, or a business willing to expand internationally, FRANCOphile Legal Consulting Ltd will cater your specific requirements and will look after your interests in the short and long term.

Benefiting from an extensive network of international lawyers, solicitors, accountants and financial advisors based in London and in several jurisdictions, FRANCOphile Legal Consulting Ltd is able to handle your interests in different countries around the world.

Our approach and solutions are tailored to our clients’ needs. We believe that our clients are unique and warrant distinctive service.

Our international coverage includes France, London, Tunisia, Morocco, Egypt and Mauritius. If you would like to know more about us then fill out the contact form above and we will be right back to you.

Hello David, Apologies for not getting back to you sooner.... but we have been quite busy!,

I think initially it was a lucky break that we made contact with Cle France at the beginning of our search for a property in France.

The whole process from initial advice on various topics and viewing a shortlist of properties was a pleasure and hassle free. The advice and information on the website is very informative especially with regard to money transfers with your currency partner who was very user friendly and professional.

We are very happy with the house  and currently putting finishing touches to it.

Thanks to both you and Sharon for making this a positive experience.

Regards John & Judy.

Buying a House in Normandy or indeed buying a house in any region of France with the French Property Network - Cle France is easy and stress free, John and Judy think so and so will you.

You may love Eurovision, you may hate it or you may just be indifferent about the annual song contest but one thing you need to know is "the French" love it! 

So buying a property in France and holidaying there during May you will be sure to see TV coverage in bars and public places and if you buy a house in france for full time living then be sure to have to use your French language skills to discuss the current years song entry.

We know of French families that make a party weekend of the event and invite friends and family to their houses for Eurovision get togethers that run long into the night, so be prepared to join in with a sing-a-long!

On Saturday night, most of Europe will be watching the finale of the 2015 Eurovision Song Contest. If you’re not familiar with this contest, it’s an annual song competition with countries in the European Broadcasting Union participating. This year, for its 60th anniversary, the contest is taking place in Vienna, Austria, because last year’s winner was Austria. Eurovision is a very popular: this year, an estimated 600 million viewers globally will be celebrating 60 years of singing.

Image courtesy of This Week UK

How it works is each country selects a singer to represent them. What surprised me is that the representative doesn’t have to be a citizen of the country he’s singing for! Canadian singer Céline Dion (ever heard of her?) sang for Switzerland in 1988 with the song “Ne Partez Pas Sans Moi” (Don’t Leave without Me), for example. Her participation helped launch her international career, so I’m pretty sure it’s safe to say that we can think Eurovision for our chance to perform our own drunken renditions of “My Heart Will Go On” at karaoke. Merci, Eurovision!

Céline isn’t the only big timer to come from a Eurovision background. ABBA won for Switzerland in 1974 with “Waterloo”.

The competition has two semi-finals and a final. For each semi-final, the 10 countries with the highest scores will make the journey to the Eurovision host country. Regardless of where they place, there is a group of 5 countries known as the Big Five that automatically place into the finals because they’re the biggest financial contributors to the European Broadcasting Union.

They are: France, Germany, Italy, Spain, the UK, and Australia. (Hey... that’s not 5. That’s 6! And Australia??). The previous year’s winner is also automatically in the final.

The winner is decided by 2 factors: a jury and public vote. Both are given 50%. This method can lead to a lot of geopolitical voting (which is interesting in and of itself).

France has appeared in the competition in 58 of the 60 competitions, missing the 1974 and 1982 contests. They’ve won 5 times:

1958 with “Dors, mon amour” by André Claveau

1960 with “Tom Pillibi” by Jacqueline Boyer

1962 with “Un premier amour” by Isabelle Aubret

1969 with “Un jour, un enfant” by Frida Boccara

1977 with “L’oiseau et l’enfant” by Marie Myriam

Since 1977, France has placed bronze 3 times and silver twice. Most notably, they placed last in 2014 with “Moustache” by Twin Twin. Yikes.

So what has France submitted this year to not repeat last year’s title?

This year’s French representative is a woman named Lisa Angell who is singing a song called “N’oubliez pas” (Don’t Forget). The song is a message to the entire generation to not repeat the mistake of past generations. It’s a song of “hope and peace, of courage and solidarity,” according to the singer.

Here are the the lyrics and an English translation.

Il ne me reste que des larmes

I only have tears left

Ces quelques notes venues d’autrefois

These few notes from the past

Et le chant de nos prières

And the melody of our prayers

Nos cœurs qui espèrent

Our hearts are hoping

Et le vide sous mes pas

And the emptiness beneath my steps.

Il ne me reste que les cendres

I only have ashes left

De mon village plongé dans le silence

Of my village that was plunged into silence

Je ne suis qu’une blessure

I’m only a wound

Un cœur sans armure

A heart without armour

Comment survivre après ça?

How can you survive after this?

Mais je suis là, je n’oublie pas

But I’m here, and I won’t forget

Dans mon village balayé par l’histoire

In my village swept away by history

Et je vis là, n’oubliez pas

And I live there. Don’t forget.

Effacé des cartes et des mémoires

Erased from the maps and memories

Je me souviens du rire des enfants

I remember the laughter of children

La voix des hommes quand ils partaient au champ

The voices of men leaving the field

Les fêtes des moissons

The harvest celebrations

L’odeur dans les maisons

The smell in the houses

Les éclats d’amour et de joie

The bursts of love and joy

Quand ils sont arrives

When they arrived

Cachés derrière leurs armes

Hidden behind their weapons

Ils étaient des milliers

There were thousands of them

Ils riaient de nos larmes

They laughed at our tears

Ils ont voulu détruire

They wanted to destroy

Nos croyances et nos âmes

Our beliefs and our souls

Avec des mots de haine

With hateful words

Que l’on n’connaissait pas

That we didn’t know

Je suis ici ce soir

I’m here tonight

Au milieu de ces ruines

In the middle of these ruins

Pour vous parler d’espoir

To talk to you about hope

Et vous chanter la vie

And to sing about life

Et je fais le serment

And I’m making a promise

Quand séchera le sang

That when the blood dries

De reconstruire ma ville

I will rebuild my city

Bien plus belle qu’avant

Even more beautiful than before

Mais n’oubliez pas

But don’t forget.

AND... remember to sing along on Saturday night!

Blog submitted by: Alex at The French Property Network - Cle France.

This blog was originally posted on The French Language Blog pages.

Hi David & Sharon,

You certainly have a smooth operation everything fits together like a well oiled clock, I found the whole process of buying a property in France straightforward thanks to you & your partners from the Immobilier to your currency partner, I would definitely recommend you to anyone thinking of buying a property in France.

Thanks again James & Radka.

We do seem to have 'hit a stride' with finding really nice clients! finding nice houses in France to sell is easy for us at least with our network of French agents who are en forme (and our English agents and other nationalities of course). Finding vendors motivated to sell and finding buyers ready to buy is becoming less and less of a challenge as at the moment the time is just right for buying a house in France with us at Cle France - The French Property Network.

We wish James and Radka many years of enjoying there French home in rural Normandy.

REDUCED in price - A FANTASTIC OPPORTUNITY TO ACQUIRE this ideal holiday home, easy to run and 'lock up and leave' in a small village hamlet between l'Absie and Coulonges, only 30 minutes south of Bressuire, where there are all shops and services. 90 minutes from the Vendee coast and airports at Nantes and La Rochelle. 4-5 hours from the car ferries in Caen, Cherbourg and Le Havre.

ZPC00372 is now only 49,950 Euros FAI

A well presented end cottage with attractive rural aspect. There is a small courtyard directly in front of the house with further gravelled garden with outbuildings across the lane. Parking spaces.

Entrance into open plan living room with kitchen area, stairs to first floor landing, good size double bedroom, shower room with WC.

Rooms in more detail: 

Ground Floor - Living/Dining/Kitchen - 33.00 m2 - Open Plan, exposed beams, exposed brickwork.

1st Floor - Bedroom - 23.00 m2.

Corridor - 3.00 m2 - landing and large cupboard.

Bathroom - 4.00 m2 - Hip Bath with shower over, WC and basin.

Cellar - 33.00 m2 - head height under living room, storage, sink and electric.

Local Taxes:

Taxe fonciere - 147 euros a year.

Taxe d'habitation : 204 euros  year.

Some of the furniture can be left if required: Dining Table and 4 chairs, Settee, Cooker (gas bottle), Buffet Unit, SuperKing Bed / Mattress, Other items (to be agreed), Washing Machine (top Loader - new), Misc items / fixtures and fittings.

Outside:

Courtyard, further courtyard with covered terrace and small outbuilding. Parking for 2 cars.

Mains drainage is connected to the property.

Estimated Notaire fees of 4633 euros.

Features: Parking space, Terrace, Outbuilding(s), Courtyard. Living area 62 m2 approx. Living room 33 m2 approx. Shower room (1st floor). Bedroom 1 (1st floor 23 m2).

All our prices are quoted as FAI (agency fees included) unless otherwise stated and 'notaire' fees are around 7% (on average) but feel free to ask us for an exact amount on any particular French property for sale you are interested in.

Indeed please feel free to use the 'MAKE AN ENQUIRY' tab above to ask us any questions you have about buying a property in France. Our UK based enquiry office and staff will guide you through the entire buying process step by step from your first contact right up to taking ownership and beyond, all free of charge.

So when you buy through Clé France you can be confident that you are paying no more than the standard commission rates you would pay anyway, but you have the added benefit of a bi-lingual support team.

CONTACT US: to discuss your search for property in France, or indeed for any further information you may require on French property sales.

Blog submitted by: Alex at The French Property Network - Cle France.