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Inheriting a 400,000€ property – tax free. Is it too good to be true?

The laws of inheritance in France are notoriously restrictive and complex. Paying tax on inheritance will always be a controversial topic. It makes sense therefore to consider various ways to mitigate your inheritance tax liability. Donation partage is one option which may be suitable for your situation. It is a form of ‘living will’ that enables your beneficiaries to receive value from your assets during your lifetime … whilst you continue retaining the use of those same assets. Unlike a will which takes effect when a person dies, a donation partage enables you to transfer all or part of...

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Tax changes to the home based employment scheme CESU

The French government has announced its 2020 budget with seemingly bold plans to reduce taxes for households by €9.3 billion euros and businesses by more than €1 billion. This is the headline detail – however what are some of the other changes proposed? One concerns CESU or le chèque emploi service universel. Established in 1994 CESU has an estimated 2 million users. The popular scheme enables a person – a private employer – to claim 50% of the cost of employing someone to undertake various jobs associated to the home; these include looking after children or elderly people, babysitting, small works in...

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Catches behind using the new ‘flat tax’ forfeit system for share capital gains

A question I am often asked given the new ‘flat tax’, concerns how Capital Gains on shareholdings are assessed and treated in France for tax purposes, where these could relate to investments in company shares or property-related shares. Let us begin by stating a simple fact: if you are a permanent resident in France you will need to declare all of your shareholding capital gains to the French tax authorities (the Fisc) along with all of your other income, such as pensions, share dividends and interest. However, after that, it is not straightforward – and indeed the system was made more complicated...

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Tax challenges ahead for non-French residents with French letting income

The French tax authorities – known as the “Fisc” – have of course a particular way of going about their work, with departmental tax offices interpreting the law often quite differently. For example the treatment of rental property income from French properties and the liability to pay social charges is a case in point. It has also been a contentious one! Although the Double Tax Treaties should apply, many tax offices in France are applying French tax law creating a real headache for many non-French residents. In 2019 the French government stated that non-residents who lived in the European Economic Area...

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Non-French residents having French letting income

The Fisc issued a statement for the 2018 year of income of the liability to the French social charges. This states that European Economic Area (EEA) residents who are affiliated to a social security system outside of France but within the European Economic Area will be exempt from the French CSG and the CRDS. As a result, French letting income will be liable to a charge of 7,5%, being the social charges that do not fund social security system organisations. But !!!  The social charges are levied at 17,20%, and the CSG and the CRDS between them amount to 10,40%, so leaving 6,8%....

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French tourist rental income

There seems to have been slipped in quietly some changes to the laws on tourism lettings, whether of Chambres d’Hotes or self-contained lets.. The first of these changes is what the title now actually covers, and the new definitions cover : chambres d’hotes                                           -              only the provisions of rooms, effectively a bedroom, in someone’s property. furnished tourist lettings                             -              essentially anything more than a chambre d’hotes, such as a holiday suite, apartment or even property The second change is that the notion of a habitual activity is introduced, and if this is applicable, either on an annual bais or during a tourist season, then...

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France perverting the double tax treaties?

Until a few years ago, it was possible to find the total income the French government perceived from the social charges and income tax each year.  Since then, these two means of taxation have always been shown combined.   Almost, the cynic could say, in an attempt to hide the fact that until the amalgamation of these two means of taxation, it was clear that much, much more was being collected from the social charges than was being collected in income tax. Double tax agreements exist between one country and a host of others, inter alia, to set out the manner in which the application of income tax in each...

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