French Wealth Tax – How does it affect UK citizens?

The French wealth tax not only affects those who are resident in France but also those who are resident elsewhere but have substantial wealth or assets there.  They type of assets taxed include:

• Property
• Investments
• Cash
• Personal belongings

Business assets, art, antiques and historical artefacts are excluded.

Former French President Nicolas Sarkozy cut the wealth tax for 2012 and beyond to a 0.25% charge on the value of assets worth over 800,000 euros (£635,000) up to 3 million euros, and a flat rate of 0.5% for anything more than that.

Under new French President, Francois Hollande, the rates have reverted back to the 2011 level to a 0.55% tax on wealth between 800,000 euros and 1,310,000 euros and a progressive increase thereafter reaching a maximum rate of 1.8% for wealth that exceeds 16,790,000 euros.  It seems likely that these rates will remain for the foreseeable future.

If you decide to sell your home in the UK and retire to France, then you will be deemed resident in France by the French authorities.  If however, you only spend your summer months there, then you are unlikely to become tax resident.  The location of your primary home is a key issue for deciding if someone is liable to the wealth tax in France. If you move to France, you will be deemed French resident and liable to pay the wealth tax should you qualify.  There is, however, a five-year breathing space so should you want to live in France for only four years for example, then you will be exempt from the wealth tax (though still likely liable for income and other French taxes).

However, someone who spends almost no time at all in France could still be liable to pay the wealth tax should their assets reach 800,000 euros. This is because any assets you own that are located in France will attract the tax, whether you are resident in France or not. This only applies to assets located in France and so those who are not resident there can control how much wealth they bring into the country, thus saving themselves from the wealth tax.

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