French financial information and bulletins from Pelican Consulting

19/09/2011

French tax assessments on UK rental income and goverment pensions

French tax assessments are being issued with an incorrect treatment of taxation concerning UK rental income and Government pensions.

Indeed, the French tax authorities are giving tax credits of tax supposedly paid in the UK, which are far too high in light of any tax that was in fact paid in the UK, if any was indeed even paid.

This tax credit is incorrect and, if affected, you are well advised to inform the tax office of their error as soon as possible.

01/07/2011

Final French tax changes

The French Senat has reviewed the final modifications which were planned for the 2011 tax law, and have made 3 relevant modifications :

- The increase in the tax rate on withdrawls from assurance vie contracts to 25% on values over 902 838€ after the abatement

- The 100% tax-free benefit to the beneficiaries where the subscriber to the assurance vie contract was non-resident shall probably go unless the beneficiary resides abroad at the time the owner's death.

- The additional tax due on properties held by foreign nationals has also been scrapped

28/06/2011

French healthcare for new EU residents

With regards to the French health system, the provention of foreign EU nationals being able to belong to the French health system for the first 5 years of their residency is to be cancelled, enabling these foreigners to belong to the system from the day they become resident in France.

The Ministerial deicision is due to be published before the holiday break.

17/05/11

New tax changes 2011 - new non-resident's tax

The French are instigated a tax for non-residents who have property in France,

The tax would be based on the 'valeur locative cadastrale', would be levied at a flat rate of 20%, and would be due from 2012.

However, the tax is due on those who have low income generated in France as a proportion of their total world income, meaning that it is targeting those with other major sources of income. This said, the threshold have not been made available yet, so we have to wait and se exactly how many people will be affected, and at what levels of income.

The tax will also apply to those who leave France, but there will be an exemption for six years to those who leave after having spend at least three of the last ten years in France.

So, watch this space ...

17/05/2011

New tax changes 2011 - ISF

ISF threshold is increased not to 800 000€, but to 1 300 000€ in 2011, and from 2012 the tax rate.on the excess being levied at 0,25% up to the sum of 3 000 000€, and any excess then being taxed at 0,5%.

From 2012 there will be transitional relief for those with net wealth between 1 300 000€ and 1 400 000€, and from 3 000 000€ to 3 200 000€.

For those with net wealth over 1 400 000€, whilst the tax declaration needs to be done per the standard dates, the tax itself will now be only due by 30th September this year.

The Bouclier Fiscal is also being removed ... but gradually ... with some income being removed from the calculation as of the assessments on 2011 income, and the remainder on 2012 income.

10/05/2011

Cessation of prêt viagers hypothécaire for foreigners

The Credit Foncier, the main underwriter of the "prêt viager hypothécaire", has recently taken the decision not to provide these type of equity release schemes to foreigners, even though the applicant may be resident in France.

This is due to two reasons : the first is incompatibility of French succession laws, not with the new eurpopean succession rules that make successions liable to the laws of the country of residence, but with the right to elect to use the country of nationality's succession laws.

The second reason is because it is illegal for the funds from a PVH to be used for professional purposes, and this cannot be verified with regards to non-residents and foreign nationals residing in France

28/02/2011

UK pension tax-free lump sums

Further to the recent publication of articles syaing that UK pension tax-free lump sums will be taxable in France, we have published an article showing - due to different factors, and law - that this is in fact not the case, nor can it be the case.

The drama seems to be due to an additonal line of text in the French tax code, but which, as far as we are concerned, not only cannot and does not refer to pension lump sums, but in fact refers to payments from Qualifying Recognised Overseas Pension Schemes (QROPS), and similar schemes.

Please see our article section for more details and explanations.

12/01/2011

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11/01/2011

2011 - All change for taxation !

There are a number of tax changes for 2011 which will make a diiference that will be felt by many.

These changes include an increase in the liability to taxation, but also remove certain allowances and reduce rebates and abatments, and there is even an additional 1% liability on investment income. Life Assurance contracts have also been targeted by the social charges, removing part of their fiscal advantage.

Whilst details of the tax changes are on our tax pages, there are means of maintaining the advantages of the assurance vie contracts, so please contact us for all further details.

03/01/2011

Social charges on the Fonds en Euro annually

In their attempt to recuperate social charges sooner rather than later, the French government have resurrected the different between the mono and multi-support Life Assurance contracts, as a result of which, from 1st january 2011, they will be levying social charges on the profit element of the 'fonds en euro' fund each year.

This provision only applies to the 'fonds en euro'as it is the only fund which is known to increase each year, the social charges liability on all other funds within the Life Assurance contract will continue to be levied either on the occasion of a withdrawal on the profit element included in that withdrawal, or on the profit element included on the amount left to beneficiaries.

01/06/2011

Life assurance contracts can no longer be used to mitigate wealth tax

In May 2010 the French fiscal authorities announced that Life Assurance contracts that are locked and inaccessible for at least 8 years could no longer be excluded from the value of netwealth for the french ISF (wealth tax).

The fiscal authorities had, in 2009, removed the exclusion of "bonus contracts", where the growth elements of investments in Life Assurance contracts could be excluded from the calculation for the wealth tax.

Whilst there still exists the possibility to mitigate the liability to wealth tax, and some of these options can still include the use of Life Assurance contracts, it does mean that we can be more creative !

18/03/2010

Social charges are now applied to beneficiaries of life assurance contracts

The french fiscal authorities have, for sometime, been concerned about the fact that funds invested through a Life Assurance contract - and more especially the profit element of this investment - which remained in the contract at the time of death were escaping liability from the social charges.

So, from the 1st january 2010 beneficiaries of life assurance contracts will be assessable to the french social charges on the element of profit included in the amount they have inherited.

This liability is in addition to the tax liability and, more importantly, is irrespective of whether or not income tax has been paid by the beneficiary due to the sum inherited being over the relevant tax free threshold.