It can come as a surprise to US expats moving to France when they discover France doesn’t have trust laws. A trust can’t be created in France though a US citizen residing in France may create a trust under US law or be a beneficiary of a US trust. But it’s complicated. And for Trust loving Americans it can be a challenge when moving to France – especially when it comes to a living trust which are routine in the US, but if you’re moving to France, you should probably leave that living trust behind for all sorts of reasons – not least because of the onerous tax penalties. We asked American finance expert Amy Witherbee of Sanderling Expat Advisors to explain what the issues are for US citizens who have a living trust and how to deal with the situation to your benefit.

What is a revocable trust anyway?

Trusts are very popular generally for Americans – to do charitable work, to avoid taxes, to control assets, to control people… But there is one form of trust that we use more than any other. The revocable trust, also known as a living trust, is common in the U.S. primarily for one reason: it bypasses the probate court processes that have become long, tedious and expensive in most states.

Estate attorneys almost always recommend revocable trusts. But if you’re planning a move to France, you should probably get rid of the trust first.

We call these trusts “revocable” because you can revoke them at will – if you want to cancel the living trust and the assets within it – you can whenever you want to. During your lifetime, the living trust is still part of you for tax purposes. It uses your social security number for its tax ID, and any real estate, income, accounts or other assets in the trust are considered still to be yours for tax purposes. It doesn’t mean you can avoid or manage taxes or liabilities.

However, on your death, the trust becomes its own entity, with its own tax filings and legal liabilities. It can only be ended by certain parties – often the trustees designated in the trust and/or a court of law.

How does France treat trusts?

Until 2023, this was all fine and dandy for US expats moving to France. However, trusts do not exist as a concept in French law. To the extent there are any laws about them, those laws were put in place to deal with trusts set up in the other countries (usually the U.S. or U.K.) that impact France or French residents.

For quite a while now, France has required specific processes for trusts of any kind created abroad. First amongst these is an initial accounting. If a trust has a trust creator (settlor) or beneficiaries who are resident in France, if the administrator of the trust is resident in France on January 1st of the year, or if the trust contains French assets, it must file a form 2181-T1. This form is not a tax, but it details the people involved in the trust, its terms, relevant addresses and contact information and the list of assets in the trust. After that, the trustee files an update of this information annually on form 2181-T2.

These two filings can be either fairly simple or very complex, depending on the assets you have in the trust. And plenty of expats have found themselves in a sea of accountancy and legal questions while trying to pry the information out of a secretive family trust. But until 2023, people with living trusts did not tend to put in much (or any) effort.

What changed

In 2023, an American couple living in France appealed the French tax authority’s decision on the income from their U.S. Trust. At the time, the tax authority was treating U.S. trusts as “pass-through” entities for the purpose of taxes, and they ignored that the assets were in a trust at all.

So, if your trust earned say €3000 in dividends from an investment account and €40,000 in capital gains from a real estate sale, you reported the income (or your share of it) as personal income in your French tax Déclaration. This was true whether you actually took the money out of the trust or not, which is how we tax those trusts in the U.S.

What’s more, because you paid your taxes on whatever was earned in the tax year, the annual trust filing (form 2181-T) was more of a formality.

But the French-resident American couple won on appeal. The Conseil d’Etat confirmed that all trusts need to be treated as taxable, rather than “pass-through,” entities. And that now includes your previously benign revocable trust.

Why you need to close your trust before you move to France

What does that mean for you? First, this change is recent and the experts are still trying to figure out the consequences.  But at the moment, it looks like you will pay taxes on income from the trust only when you take that asset out. If the brokerage account you put in trust earns 30,000 USD in dividends from bonds this year, but you don’t withdraw anything from the account, you will not pay tax personally. This is what the American couple was looking for on appeal.

But it also means that the income from your trust will be treated as a particular sort of investment income (the amorphous “other income” category of the Tax Treaty (in the amorphous “other income” . And that type of income does not get the lovely favorable treatment that much of your brokerage income was getting before when it was just like interest, capital gains or U.S. bond dividends from your savings. Ouch.

To make matters worse, the annual 2181-trust form is a lot more important now because it is the authorities’ only insight into what is going on with those assets. Expect the authorities to be much more diligent in ensuring you have filed those.

And there are other potential consequences of your trust losing “pass-through” treatment. You will now have to pay personal taxes on trust income only when you take it out of the trust. That doesn’t sound like an issue, but if you close your trust after moving to France, everything that was in it that was not part of your original capital becomes income for that year. So you could end up with a complicated mess as you try to determine what was “capital” and what investement income is suddently taxable.

And what about retirement accounts? The French law on trusts makes exceptions for certain trusts used to create pension or retirement accounts. So money coming directly from your 401k should be fine. But some U.S. attorneys have their clients add retirement accounts to their trusts even though those do not generally go through probate anyway. The new decision seems to indicate that retirement funds held in a trust might no longer get the favorable tax treatment afforded to pensions and retirement accounts.

What should you do?

Every person’s situation is different and needs to be treated as such so there’s no one answer that fits all. But if you are thinking of moving to France, particularly if it’s a permanent move, you should consider closing your revocable trust.

And if you’re already a French tax resident, you need to be very careful about making any changes without a thorough analysis of the repercussions.

And you definitely want to make sure that you start filing your trust forms. The penalties and the paperwork can be significant if you don’t.

Sanderling Expat Advisors are professional and qualified experts in both France and the US. They can help you decide what’s best for your when it comes to managing your investments and tax management when moving from the US to France and vice versa.

Find out more and book your free consultation or request a tailor-made financial plan for your household at: sanderlingexpat.com

The post What to do with a Living Trust when you move to France appeared first on The Good Life France.

So you’ve decided to move to France. It’s a very exciting time, if a little daunting. And there is so much to do, from packing and planning to saying goodbye and organising logistics.

But whether you’re moving abroad for a new job and a fresh new start, or retiring and looking forward to taking it easy, one thing that is really important to sort out before you move is the financial side of things. Jennie Poate at Alexander Bates Campbell Europe Limited,  a company of Independent Financial Advisers specialising in wealth preservation and management, tax, financial and succession planning for private clients and their families, throughout Europe, explains why you should get good financial advice before you make the move.

The Importance of Using a Financial Adviser Before Moving Abroad

At this stage, you may be tempted to do things yourself. After all, how hard can it be? Or you may take the view that there is not that much to sort out financially and you’ll handle it all once you get to your new home. However, navigating not one, but two tax systems, one of which may be in a foreign language and organising your finances in a way that enables you to live the life you want, worry free, is not necessarily as straightforward as you think.

A financial adviser can guide you through the quagmire of regulations in different countries and help you make informed decisions that that protect your financial position and help you ensure you get the best out your finances. With this in mind, here are the main things that a financial adviser can help with if you move abroad.

1. Tax planning and compliance

Tax rules vary from country to country and it’s really important to understand the rules that apply to you and make sure you comply with them. If you don’t, you could face serious penalties. Just to make the situation slightly more complicated, in 2024/5, the UK tax rules for the payment of Inheritance Tax are changing, and from 6 April 2025 will depend on an individual’s tax residence rather than on domicile.

A financial adviser can help demystify the tax laws that apply to you and help you with:

• Tax residency and compliance

Tax residence and domicile are different. Tax residence relates to where you are living in a tax year and is therefore short term, whereas domicile is more long-term and refers to the country which you consider to be your permanent ‘home’ over the course of your life. Where you are tax resident or domiciled will affect what tax you pay and in what country. A financial adviser can help assess your tax residency and status, ensuing you are compliant both in the UK and in the country you move to.

• Tax planning

Once you know what tax regime/s applies to you, your financial adviser can assist with tax planning. There may be foreign-earned income exclusions, tax credits or offshore accounts that you can take advantage of, or it may just be a case of organising your financial assets in the most tax efficient way possible, bearing in mind your unique circumstances.

The importance of getting your tax affairs in order should not be underestimated in terms of giving you valuable peace of mind and ensuring you don’t pay more tax that you have to.

2. Cost of living and budgeting

Wherever you are in the world, you need to have a realistic budget for your day-to-day spending and a contingency plan in case something goes wrong.  A financial adviser can help you asses and optimise your various income streams and your assets and then help you prepare a budget for your new life abroad. This not only provides peace of mind, but it also means you will know how much you can afford to put away each month in terms of savings, etc. as well as how much you can afford to splash out on luxury items or perhaps a trip home to see relatives.

There are also always things that you don’t plan for or expect, such as legal fees, building work or an unexpected medical bill but your financial adviser can help you ensure that you’re able to manage financially should the worse arise.

3. Healthcare and insurance planning

Each country comes with its own healthcare system and insurance requirements and you need to make sure you know what these are so that you can make sure you are covered. You may need to take out private health care insurance and if that is the case, the right policy will depend on a number of factors including your age, health and history. Of course, you will probably need other insurance such life and property insurance and a financial adviser will be able to recommend the right person to speak to enable you to obtain the policies you need to purchase and which are the best policies for your situation.

4. Managing currency exchange rates

Currency exchange rates can and do fluctuate but this is something that often gets overlooked. A prolonged or profound change in currency rates can have a big impact on your savings and investments which in turn can affect your long- or short-term cash flow.

If you’re working with a financial adviser, they will be able to again recommend a trusted company about this so that you can plan accordingly and minimise the risk to your finances. This may mean holding multiple currency accounts or using other ways to safeguard your assets and oncome against damaging fluctuations.

5. Investment strategy and portfolio management

You may be wondering what the best thing to do with your wealth is when you move abroad, or you may think that your investments don’t need much thought at the moment. However, it’s important to bear in mind, that like tax, every country has its own rules about investments.

A financial adviser can assess your existing investment portfolio and strategy and advise you on the impact on this of moving abroad. There are multiple factors that may mean you need to adapt your strategy and these include:

• Re-evaluating your financial and personal goals or helping you to define these for the first time
• Assessing your capacity for risk bearing in mind your move
• Assessing the investment rules and opportunities of the country you’re moving to
• Planning for currency fluctuations
• The impact of a move on your pension

6. Estate planning

With such a big event as moving country, it is easy to forget your estate planning which includes updating your will, planning for who will inherit from you and planning for Inheritance Tax.

Once again, the country you move to will probably have different laws about wills and inheritance so reviewing these is of the utmost importance if you want your wishes to be carried out. Your financial adviser will be able to check that your estate planning documents comply with the laws of your new country and make sure your wishes are implemented in a way that ensures they will be carried out when you die. This may include recommending an international notaire/solicitor to help you achieve this.

Moving abroad is a great opportunity but in order to get the most out of your time abroad, it is so important to take care of your finances. Luckily, navigating the different rules and regulations and making the right decisions for your future doesn’t have to be overly complicated if you get some help. Knowing you are tax compliant, and have enough money, even if the worst happens is an important first step to enjoying a happy and fulfilled life abroad.

Contact Jennie Poate at: jennie@abc-eu.com to find out more and arrange a consultation.

This communication is for informational purposes only based on our understanding of current legislation and practices which is subject to change and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

ABC-EU are members of Nexus Global (IFA Network). Nexus Global EU is a division of Blacktower Financial Management (Cyprus) Limited (BFMCL) and Blacktower Insurance Agents & Advisors Ltd (BIAAL). ABC-EU is an Appointed Representative of BFMCL which is licensed and regulated by the Cyprus Securities & Exchange Commission (CySEC) – Licence No. 386/20. ABC-EU is an Appointed Representative of BIAAL which is licensed and regulated by the Insurance Companies Control Service (ICCS) – Licence No. 5101

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As a US expat living in France, you’ll need to get used to form filling and paperwork. You’ll need to declare assets and income in France, wherever the source is, plus pay tax, and you’ll also have to continue reporting your finances in the US. We asked the experts at Sanderling Expat Advisers, who specialise in helping Americans in France to deal with their finance and taxation requirements, to explain more about reporting your foreign income for American expats in France.

Income from the U.S.

If you’re an American living in France on a permanent or long-term basis, and therefore tax resident, it’s highly likely that you’re receiving income from a U.S. source. This could be in several forms including social security payments, fees from U.S. clients, capital gains or dividends from your U.S. brokerage accounts, interest from your U.S. bank or withdrawals from your U.S. IRA or 401k. There are lots of income sources that are classified as “foreign income”, or in French, “revenus de source étrangère.”

Good planning makes a big difference

As a tax resident of France you do, absolutely, need to report every centime of this income, in France. But you likely won’t have to pay tax on all of it. In fact, Americans in France get some pretty amazing breaks on their U.S.-sourced income. And good planning in advance makes a big difference – working with independent advisors like us to help you bring together comprehensive financial planning and assistance will help you solve problems and minimise tax liabilities before they arise.

Some income, like retirement plan withdrawals, social security and even some capital gains doesn’t get taxed in France at all. You must report them to French authorities, but you’ll receive a full credit for the taxes that would have been owed – had it not been for the US. -France tax treaty.

Other forms of U.S. income, such as dividends, receive a partial credit for the U.S. tax deducted, considerably lowering the amount of taxes/social charges you will pay in France. But your U.S.-based income does figure into the calculation of your effective tax rate in France (taux effectif).

Start getting your foreign-sourced income worked out with the French tax authorities by filling out the Form 2047 with help from the “Notice,” or instruction guide, that goes with it. This is the official form for reporting income that comes from outside of France. And for expats, it is generally the first thing to figure out as you begin your French taxes.

Reporting your foreign income for American Expats in France

There’s no getting away from the fact that there’s a lot of form filling to do.

Start by filling in all the fields that apply on the 2047. Then move to the 2042 supplements that make sense in your situation. You will see these lined up as options in your online impots.gouv account (or in the PDF forms dropdown box if you are a first-time filer). There are supplementary forms allow you to provide more details, specify credits or deductions you should be getting (2042 RICI),), or break down your micro-entrepreneur, agricultural or other self-employment income (2042 C Pro), etc…

When you’ve sorted out which of the supplements apply to you, fill in your foreign-sourced income information again. That’s correct, not a typo, you do need to do it again. You should view your 2042 supplements as summaries of each type of income you receive, with the U.S. and French sourced stuff added together.

Form 2042 enables you to list all the types of income and the deductions/credits together in a single, summary form. It offers appropriate boxes for the results of all those supplementary form efforts.

These forms address both income taxes and social charges (referred to with the acronyms CSG, CRDS, and CASA). If you have U.S. income that is subject to social charges, you will use line 9 of Form 2047 and then line 8 on the 2042C.

Also you should use Form 3916 to report every foreign-held account you had during the year being reported on. That includes investment accounts, bank accounts, money transfer accounts (i.e. Paypal and Wise) and even your credit card accounts.

All forms are available through your personal impots.gouv account. But if this is your first year of filing, you will be in paper format.

If you’d like guidance and help with any aspect of finance and tax planning as Americans in France, feel free to get in touch with Sanderling Expat Advisors at: sanderlingexpat.com

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If you’re thinking about transferring your UK pension to France, there are several things to consider. We ask Helen Booth, financial advisor at deVere France: How do you know if moving your UK private/workplace pension abroad is advisable?

Transferring your pension from the UK to France

Transferring a pension abroad has always been challenging and requires specialist financial advice. The answer is often down to where you live and work. If you live in France permanently and have no intention of returning to the UK, then transferring your pension might be the best thing for your finances.

Pension transfers are usually complicated

But you should be aware that rules change frequently when it comes to pensions and transferring them out of the UK. For instance, in April 2024, the UK government abolished the Lifetime Allowance (LTA) and introduced new rules that will limit tax-free lump sum payments both in lifetime and on death, and when transferring to a Qualifying Recognised Overseas Pension Scheme (QROPS).

Pension amounts over the £1,073,000 limit set by the UK Government will now be subject to tax.

Previously, all transfers to a QROPS were subject to a tax charge of 25% on the amount over the current Lifetime Allowance (e.g. £1,073,033). Some transfers to QROPS can be made free of UK tax provided certain conditions are met, irrespective of the amount transferred, but in others, you’ll have to pay 25% tax on the transfer.

You’ll usually be able to transfer-tax-free if:

• You’re a resident in the country in which you’re transferring to a QROPS.
• You’re a resident of a country in the European Economic Area (EEA), and the QROPS you’re transferring to is based in another EEA country or Gibraltar.
• The QROPS you’re transferring to is provided by your sponsoring employer.

Get professional advice

If the value of your pension is nearing the £1,073,000 limit, you really should consider talking to a financial advisor about moving your pension abroad before you incur tax liabilities. But you should know that restrictions introduced as a result of Brexit mean that a financial advisor in the UK may not be able to advise you; you need to choose the right advisor who should be both qualified and able to advise you about all the complexities of transferring your pension from the UK to France – and drawing on your pension if you do transfer it. For instance, some UK Pension holders may find they have an opportunity to mitigate the new OTA (overseas transfer allowance) charge when transferring the pension to a QROPS. Also, be aware of potential changes to UK death benefit tax charges on pending UK pensions and any possible changes that might occur after the next general election.

When transferring a pension overseas into a QROPS or SIPP (Self-invested pension plan), always ensure it is to a recognised overseas pension scheme approved by His Majesty’s government. Check here: www.gov.uk/guidance.

Make a mistake here, and you could find yourself paying out huge amounts in taxes that could have been avoided.

Contact Helen Booth at deVere France for a free, no-obligation consultation at helen.booth@devere-france.fr
deVere is one of the world’s leading independent financial advisories; deVere France provides trusted, independent financial advice to expatriates and international investors based in France: deVere-france.fr

Please note, the above is for educational purposes only and does not constitute advice. You should always contact your deVere advisor for a personal consultation.

* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.

The post Transferring your pension from the UK to France appeared first on The Good Life France.

If you’re living in France, thinking about moving to France or you own a property in France, it’s important to review your finances. As part of this process, you may need the help of a financial advisor. As an ex-pat or non-French national, the French tax and financial sector can seem daunting and although there are many financial advisors and companies offering advice to people living in France, how do you pick the right financial advisor for you?

We asked financial advisor Helen Booth at deVere France to explain why it’s important to know the facts when choosing the right financial advisor in France, and how they can really help you to live a more comfortable life in France.

Why do I need a financial advisor?

You need to ensure your finances are organised in a way that is tax efficient and tax compliant, but you should also review your estate planning, investment strategies and pensions. This will not only ensure that your money works hard for you allowing you to enjoy your life in France, but it will also bring you peace of mind that your future is financially secure and that any loved ones will be provided for in the way you want after you’ve gone.

Understanding French tax law and finance regulations

At the outset, it’s important to bear in mind that the French tax regime and financial services are very different to the those in the UK. This can affect your income tax liability as well as any potential Capital Gains Tax or Inheritance Tax liability. France also has different opportunities for tax efficient investments and savings, and if you’re retired or nearing retirement, you may need to navigate the most efficient way to draw an English pension in France. And all of this is important when it comes to choosing your financial advisor.
Check your financial advisor is properly qualified and regulated
Since Brexit, UK qualified financial advisors who live in and are regulated in the UK, are not authorised to provide you with ongoing advice about your French finances. This means you will need to work with a financial advisor who is regulated and qualified under the French regime.

The generic term for financial advisor in France is called a Conseil en Gestion de Patrimoine.

A CIF will normally have to be affiliated to a professional body such as one of the four AMF-approved associations: La Compagnie CIF, CNCGP, CNCEF Patrimoine, or ANACOFI CIF. For example, deVere are registered with ANACOFI-CIF (National Association of Financial Advisors), and they are also registered with the Organisation for the Registration of Assurance Intermediaries (ORIAS).

Finally, ideally your financial advisor should also be EFA Certificated, or European Financial Advisor Certificated. EFA is one of the quality standards in the financial advisory industry. Only advisors currently holding the Dip PFS (Diploma in Financial Planning) designation can also have the EFA designation.

You can check the register of financial advisors in France (which you’ll find at: www.orias.fr) to see whether someone is registered, although bear in mind, this is just a register, not a regulator. You can also check their website which should have full details of their qualifications and status.

Insurance

A regulated financial advisor has to have insurance as part of their compliance. Nonetheless, you should check that they are insured and check the scope of their insurance. Professional liability insurance provides you with protection in the event that your advisors make errors, omissions, or are negligent.

Independence and expertise

Your French bank may be willing to offer you financial advice, however, they will be recommending services and financial products provided by them and they are not independent. An independent financial advisor will look at the financial market as a whole and therefore can recommend the best products or solutions for your circumstances rather than the best ones that a bank has on offer. This can make a big difference.

Next, check the size of your financial advisor’s team. A larger team may mean a larger pool of expertise and experience such as specialist knowledge in tax, pensions and succession planning. A larger firm may also have greater purchasing power when it comes to a financial product they are recommending for you and a higher level of back-end support. All of this makes a difference not just to your finances but to the level of customer service you receive.

What are they like and how do they operate?

Financial services and advice should be very personal. Your circumstances are unique, and you will need financial advice and solutions that are geared to you and what you want and need. So how does this help you choose the right financial advisor?

Start by making sure they speak your language – literally. You want an advisor who can speak English.

Check their website for anything that indicates that they make customer service a priority. Have they won any awards? How long have they been around? Are there any testimonials either on their website or elsewhere online? What kind of person are they and you can you see yourself building a good relationship with them and working with them long term? If you need to call them, will you be dealing with them personally, or will you find yourself endlessly on hold or speaking to someone you’ve never met and doesn’t know you?

Finally, ask what their process is. This is absolutely critical. You want someone who takes time to get to know you, and to understand your short- and long-term financial goals and needs, as well as your risk profile, so that they can develop a financial strategy for you. Make sure they offer regular reviews. Life has a habit of throwing curve balls at you, and it is important that you regularly review your financial plans, needs and goals to ensure they are still on track or so that you can adjust your finances and financial planning as necessary.

Your finances are such a significant part of your life, it is worth taking the time to ensure you entrust your future with the right financial advisor for you.

Contact Helen Booth at deVere France for a free, no-obligation consultation at helen.booth@devere-france.fr

deVere is one of the world’s leading independent financial advisories; deVere France provides trusted, independent financial advice to expatriates and international investors based in France: deVere-france.fr

Please note, the above is for educational purposes only and does not constitute advice. You should always contact your deVere advisor for a personal consultation.

* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.

The post Choosing the right financial advisor in France appeared first on The Good Life France.

If you’re planning to buy a home in France, you will no doubt have considered affordability, income and many other financial issues as part of your decision-making process. Whether it will be your main residence or a second home, there’s always plenty to consider in terms of running costs, renovations and affordability. What you may not have thought about in as much depth however, are long-term investment options to ensure that any income and savings you have are working as hard as possible for you. Planning tax efficient savings and investments for expats  in France is an essential part of your move.

You may be unsure how to make certain that you are saving your money in the most tax-efficient form possible. What worked in your home country may not make the most sense in France, and you may well discover that there are investment options that you either weren’t aware of or don’t feel as though you fully understand due to difference in tax laws and the language barrier. Perhaps your main concern, having made the move to France or invested in a French property, is to ensure that your children or other beneficiaries will not be left with an excessive tax burden or administrative tangles when they inherit from you.

ABC Europe

Alexander Bates Campbell Europe Limited is a company of Independent Financial Advisers specialising in wealth preservation and management, tax, financial and succession planning for private clients and their families, throughout Europe. The company is a member of the Federation of European Independent Financial Advisers and company director, Richard Alexander, advises clients across Europe and the UK.

French expertise

Independent Financial Adviser, Jennie Poate, moved to France in 2008 with her family. Now a fluent French speaker, she offers specialist financial advice to ABC’s English-speaking clients who live, or have financial interests, in France. Jennie originally trained as a certified financial adviser in the UK, where she held various management positions with large banking institutions for many years. She has retrained since moving to France and is currently working to finish her UK chartered diploma.

Jennie says: “Living and working in France means I have a unique perspective on what France is really like as a home and means I’m well-placed to be able to advise clients. My areas of expertise are cross border inheritance planning, tax and investment advice.”

Financial reviews

Richard says, “moving to another country can be a daunting prospect. Often, we find that reviewing finances can be way down the list of priorities for our clients. It certainly comes below booking the removal van and making sure visa applications are submitted for most people. Reviewing your investments and what you want them to achieve for you can be vitally important however. Taking advice now can help you avoid making tax errors that could lead to nasty surprises later.”

ABC Europe work with clients to ensure that they have everything detailed, right down to values in various bank accounts and any pension ‘pots’ that may have been collected over the years. Advisers can then explain the different taxes you might come across in your new country and give estimates as to how much they might be. Recommendations may follow to move, change or close investments and pensions so that they fit into your new country.

“Sometimes, things like ISAs are a round peg in a square hole outside of the UK,” Richard adds. “They are almost always taxable overseas. We also consider pension planning as an important aspect of moving, regardless of whether you are retiring early or planning to work. In France, getting that right and making sure any state pension contributions are up to date, and will continue to remain so in the future, will certainly help you breathe easier in the future.

Wills and inheritance

Laws around inheritance and taxation of inherited wealth differ in France and the UK, this is an area that ABC Europe specialise in advising clients on. “Understanding the importance of different inheritance rules from country to country and making a will with this in mind will mean you can have peace of mind in the future too,” Richard says. “This gives you more control over your assets. Certainly, there are many planning tools that will ease the mind and having the right professional to guide you is really important. At ABC Europe, we are by your side every step of the way.”

French investment options

As you would expect there are many ways to save your money and invest your wealth in France. Some, like the standard savings account, will be very familiar to most people, whereas the Assurance Vie, for instance, may not be something you’ve come across. It’s an investment, but with additional tax benefits that are well worth exploring. You can have it in joint or sole names and it’s  great for keeping control over funds during your lifetime before passing the remaining funds to loved ones.

Working with UK-Based financial advisers

If you already work with a financial adviser that you trust, you may not want to lose touch with them when you move overseas. In some circumstances, they may be able to continue to advise you when you visit the UK in future but, if they aren’t in a position to advise you on European laws and financial regulations, this is where ABC Europe can step in. By liaising directly with your  UK-based financial advisers we can ensure we understand the history which in turn enables a smooth transition. That way you can move to France and still be confident of getting accurate advice from a trusted adviser who understands the past advice and helps to adapt to your new life.

Find out more

ABC Europe will work with you at a pace you are comfortable with and they ensure that all fees and charges are transparent so that you can be sure of the service you are paying for. “Most importantly,” Jennie adds, “we want to be by your side as you commence and continue your financial journey so that we can help you plan and adjust as you settle into your new life in France. For us, maintaining regular contact and building new relationships for the longer term is as important for us as it is for you.”

Contact Jennie Poate at  jennie@abc-eu.com to find out more and arrange a consultation.

This communication is for informational purposes only based on our understanding of current legislation and practices which is subject to change and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

ABC-EU are members of Nexus Global (IFA Network). Nexus Global EU is a division of Blacktower Financial Management (Cyprus) Limited (BFMCL) and Blacktower Insurance Agents & Advisors Ltd (BIAAL). ABC-EU is an Appointed Representative of BFMCL which is licensed and regulated by the Cyprus Securities & Exchange Commission (CySEC) – Licence No. 386/20. ABC-EU is an Appointed Representative of BIAAL which is licensed and regulated by the Insurance Companies Control Service (ICCS) – Licence No. 5101

The post Tax efficient savings and investments for expats in France appeared first on The Good Life France.

Estate planning, succession law, inheritance tax – these could well be terms you’re already familiar with. But what do they all mean, and how do they differ from one another? If you’re an American expat living in France you may want to plan for the future to ensure your loved ones don’t inherit a costly and confusing administrative tangle when you’re no longer there to help them through it. If you’re considering writing a will, you probably already have an idea of who you want to inherit what when you die.

What can be more complicated however, is ensuring that you are complying with American and French laws relating to the distribution of your estate, who can get what and – significantly – how much tax they will pay and at what point during the process.

It could be you’re also considering gift-giving during your lifetime as a way to ease the financial burden on loved ones – now or in the future.

We asked Amy Witherbee, president of Sanderling Expat Advisors. She lives in Rennes, Brittany holds multiple qualifications including a law degree, and is a registered financial advisor in France. She shares her expertise and experience saying “I have written a series of articles that include what I refer to as the things that people often get wrong. One of the most important distinctions that it’s very easy to misunderstand is the difference between succession and inheritance tax.”

Succession or inheritance. What do I need to know?

“When someone dies, there are specific laws used by the courts, and the rest of us, to work out who gets what,” Amy says. “In the States, these trust and estate laws are specific to each state, but they are all quite similar. These laws explain how to ensure a will is lawful, what kind of things you can pass down when you die, who gets your stuff if your will can’t be found and whether you’re allowed to leave everything to your favourite pet.”

Where it gets more complicated, Amy explains, is working out who pays tax, when, where and how when someone dies. “This is the legal stuff that we spend a lot of time considering as financial advisors or lawyers,” she says. She adds that you can live in one country and opt to choose succession laws that apply in your home country in a lot of cases. “For instance, under French law you are not allowed to completely disinherit a child or spouse. If you really want to disinherit the child who forgot your birthday, you can choose to do so by applying US succession law to your estate instead. But” warns Amy, “you need to be aware that this isn’t going to do much about the taxes that those who do inherit will pay. Succession laws have nothing to do with this aspect of estate planning.”

Gifts, tax laws and the Franco-American tax treaty

There are U.S. and French laws concerning gifts (including inheritance) that apply respectively to citizens and residents of each of these countries. Americans who are French residents are subject to slightly different tax laws when it comes to gifts however, because of the treaties that exist between the U.S. and France.

“The right to opt for U.S. succession laws does exist.” Amy says. “It’s part of an EU Succession Regulation from 2015 known as ‘Brussels IV.’ In theory this means that you should be able to avoid France’s so-called ‘forced heirship’ laws that prevent you from completely disinheriting your children or your spouse.

The right to avoid these French laws has been somewhat in doubt however, because France is interpreting the legislation differently This is probably incorrect in Amy’s view and she says that most French legal experts seem to think that this situation will be corrected.

The problem, advises Amy, is that opting for U.S. succession law probably doesn’t solve the problem you originally had in mind. If you really do want to totally disinherit your children and even your spouse, electing for U.S. succession law is a good idea. If on the other hand, you were trying to cut down on estate taxes when your kids do inherit, you should probably know that the succession laws have nothing to do with the that.

Amy explains the situation further. “Exactly how the rules are applied will depend on the residency status of the person giving, and of the person receiving the gift. If this sounds complicated, it’s probably because it is. Even the authorities in each country seem confused about exactly who pays the taxes applying to gifts and estates. You should always declare your gift, however, to French tax authorities. To date this has meant that your tax bill will be credited to ensure that you don’t pay tax in France.

“If you are an American, however, and you receive a gift from a non-American French resident, there is a completely different issue to consider. If the gift is not of property or land, you shouldn’t, as the recipient, be subject to French tax. Americans though, are always subject to the U.S. Foreign Gift Regulations no matter where they live. This means if you receive a gift or inheritance of more than $100,000 from an individual you must report it to the U.S. government or face strict penalties. The same is true if you receive more than $19,570 (2024) from a foreign corporation or partnership.”

Find out more and get in touch with Sanderling Expat Advisors at sanderlingexpat.com

The post Inheritance tax planning for US expats in France appeared first on The Good Life France.

Having savings stashed away for a rainy day or investment purposes is an essential part of your wealth-building journey. But you need to ask if your savings are in the best place for you now. Helen Booth, Senior Financial Adviser at deVere France, explains how important it is to manage your investments for tax-efficient income when living in France.

Tax efficient savings plans in France

With inflation running as high as it is and the poor lack of returns on savings accounts, you could, in fact, be losing money if you leave it to stagnate in a savings account. Inflation could be higher than the interest earned, and your money will depreciate over time.

But when it comes to good support and advice, a few things need to be kept in mind. Since Brexit, financial advisers who live in and are regulated in the UK, will not be authorised to provide you with ongoing advice. Also, any tax-efficient savings schemes in the UK, such as I.S. As, are not tax-efficient in France.

If you live in France, there are better options depending on your attitude to risk.

Instead of leaving money depreciating in your bank account, you can earn better returns by investing in various currencies or different investment funds.

There are tax-efficient plans that could earn you better returns without having to pay capital gains or income tax on the income received. There are also inheritance tax benefits when you want to pass on your money to your beneficiaries.

Assurance vie

This is not a life insurance policy, though it sounds like it may be for English speakers. An Assurance Vie is an insurance investment policy that offers permanent residents in France a tax-efficient way of investing and withdrawing money with an added inheritance tax advantage.

• Funds remaining within an Assurance Vie are free of French income and capital gains tax.
• There is a choice of funds that could provide much higher returns than a low-interest savings account from a bank.
• There is no limit on the amount that can be invested.
• After eight years, €4600 can be withdrawn annually free of tax (€9200 for a married couple).
• It falls outside your estate and can be left directly to beneficiaries.
• If the policy is established before your 70^th birthday, you can name as many beneficiaries on the plan as you like, each receiving up to €152,000 tax-free on the death of the assured (anything over this amount is taxed at 20%. If any premiums are paid or the policy is started after your 70^th birthday, the amount goes down to €30,500 in total.)
• The Assurance Vie may also help reduce your wealth tax liability as there is a cap on the percentage of wealth tax you pay based on your taxable income.

It is essential that you review your savings to ensure they are in a product that will give you tax-efficient maximum returns. A financial adviser who lives and works in France and is appropriately regulated and authorised to advise you, can help you choose the most suitable way to manage your money.

Contact Helen Booth at deVere France for a free, no-obligation consultation at helen.booth@devere-france.fr

deVere is one of the world’s leading independent financial advisories; deVere France provides trusted, independent financial advice to expatriates and international investors based in France: deVere-france.fr

Please note, the above is for educational purposes only and does not constitute advice. You should always contact your deVere advisor for a personal consultation.

* No liability can be accepted for any actions taken or refrained from being taken, as a result of reading the above.

The post Make your savings in France work hard – so you work less appeared first on The Good Life France.

Tax return season is almost upon us and of course rules and regulations differ from country to country. So here are some things to consider.

• The tax year runs January to December.
• Tax forms are generally done per household for married or PACS’s couples and even children get an allowance
• There is a small window to complete last year’s tax declaration which opens shortly and runs until the beginning of June but actual dates differ according to area.
• So, you complete a tax form shortly for the time you were in France for 2023, even if you arrived say in October.

A summary of French tax rates 2024 per adult

Up to €11,294:  Nil
€11,294 to €28,797: 11%
€28,797 to €82,341: 30%
€82,341 to €177,106: 41%
Over €157,806: 45%

Flat tax on investment income in France

The tax rate for investment income remains unchanged at 30% (inc. social charges) for income. This is known as PFU or Prélèvement Forfaitaire Uniquement and for those of UK State Pension Retirement age, the social charges can reduce but you must provide evidence to the tax office to get the discount

French social charges

No changes were announced for social charges, so it looks like they will remain as:

9.7% for employment/self-employment income
9.1% for pension income
17.2% for investment income including rental income.

Real Estate Wealth tax and Succession Tax in France

The current threshold of €1,300,000 for the ‘IFI’ real estate wealth tax will stay in place for 2020, with no changes to the scale rates of tax. The 75% limitation also remains unchanged.

Don’t forget, that all income must be included on your tax return even if it has been taxed elsewhere. Usually there are agreements between countries known as a DTT or Double Taxation Treaty that clearly lists which types of income get taxed in which country so that generally you don’t get taxed twice.

Different types of pensions for example can remain taxable in their country of origin or be taxed here.

Investment income is treated similarly. So, you may have got a great interest rate say in the UK for deposit accounts, only to find that not only is the interest declarable in France but is subject to a maximum 30% tax. That account in the UK may not look so positive afterall.

Looking carefully at your finances so that you make the most of your money and get the best returns is key. Tax return time is a good time to review and refine what you have in assets. Its always good to review things from time to time.

If you’d like to find out more or have questions about how to maximise your investments, contact Jennie for an obligation free consultation at: jennie@abc-eu.com

abc-eu.com

This communication is for informational purposes only based on our understanding of current legislation and practices which is subject to change and is not intended to constitute, and should not be construed as, investment advice, investment recommendations or investment research. You should seek advice from a professional adviser before embarking on any financial planning activity. Whilst every effort has been made to ensure the information contained in this communication is correct, we are not responsible for any errors or omissions.

ABC-EU are members of Nexus Global (IFA Network). Nexus Global EU is a division of Blacktower Financial Management (Cyprus) Limited (BFMCL) and Blacktower Insurance Agents & Advisors Ltd (BIAAL). ABC-EU is an Appointed Representative of BFMCL which is licensed and regulated by the Cyprus Securities & Exchange Commission (CySEC) – Licence No. 386/20. ABC-EU is an Appointed Representative of BIAAL which is licensed and regulated by the Insurance Companies Control Service (ICCS) – Licence No. 5101

The post French Tax Rates 2024 appeared first on The Good Life France.

As an American expat living in France – should you keep your investments in France or in the U.S.? Amy Witherbee of Sanderling Expat Advisors says it’s a question that affects many expats from America and shares her advice…

It’s highly likely that as an American expat in France, you’ll have established investment accounts in the US before starting your life in France – so which investments should be where? There’s no one answer to suit all, everyone has their own set of circumstances and requirements. You might want to hold on to some investments for the long term, or for the short term. Maybe certain accounts are tax-preferred, and you want to let values grow without taxation? Everyone has different circumstances and different requierements, but some things are the same for all. There are rules, regulations and requirements galore.

Start with letting the US-France tax treaty direct your choices.

How does the US-France Tax treaty work for US expats?

As a U.S. citizen/green card holder in France, you have a strange treaty with which to work. Article 24 creates a special tax credit in France for U.S. investment account income that really should not exist. Specifically, if you are a U.S. citizen/green card holder (and even if you are also a French citizen), and you have income from U.S. investment accounts, the French tax system will let you have some, or all, free of French taxes. You still have to pay U.S. taxes on it, but this French exception can have a significant impact on your finances.

The key here is “some, or all” since not everything in a U.S. investment account will qualify. And it’s complicated. Try to work it out using government websites and you’ll get mired in a ton of jargon and legalese so here’s the simple version.

Which shares and bonds get special treatment in France

In Article 24 (2)(b) of the Treaty, two exceptions from the usual French taxes are created, one for capital gains (subsection ii) and one for interest and dividend income (subsection i). There is another for options and futures, but really, is your life not complicated enough?

Exceptions apply to the income from a stock or bond note that is:

• Paid out by the “U.S. government, political authority or local authority”; OR
• Paid out by “a person created or organized under the laws of a state of the United States or the District of Columbia” whose principal class of shares is traded “on a recognized stock exchange” as defined in Article 30; OR
• Paid out by a company resident in the U.S. so long as “less than 50 percent of the voting power” was held directly or indirectly by French residents during the year AND no person in your household had 10% or more of the voting power in the company for (essentially) the year before the income was paid out; OR
• Paid out by a company resident in the U.S. that does not get more than 25% of its gross income (directly or indirectly) from sources outside the U.S.

Note that that your income from U.S. retirement accounts (401k’s, IRA’s, 403b’s, etc…) fall under a different tax article, so we aren’t worried about those accounts here. But for the rest, we want to break these categories down into everyday language.

How it works

Your income qualifies if the company paying you this interest/dividend/capital gain income meets any of the 4 definitions above:

The first one (U.S. government stuff) is easy. That is almost always government bonds, whether from a state, county, city or the U.S. Treasury.

The second group is also (generally) great. It refers to companies that are both formed and registered in the U.S. and whose shares are traded on one of the big stock exchanges. Why generally? Well, you can absolutely buy and hold shares in a non-U.S. company in your U.S. mutual fund or ETF or even just as ADR (American Depository Receipt) shares. That means that technically, you should be sorting through the massive 1099 from your investment account at the end of the year to see what is from an actual U.S. company. More on that below.

The third group applies to a company that might not be on a big stock exchange. You could still get the tax break, but the negotiators wanted to be sure that you and your friends weren’t putting your own company in the U.S. for the express purpose of avoiding taxes.

Group four refers to the sources of income for the company itself. For instance, if you received options at work or inherited shares in a company that is not traded on the big markets. You probably know if this meet the requirements of the third group because most U.S. companies are not 50% French owned, and you will know if you are a 10% owner of a company.

On the other hand, you might not have a lot of information on where that company’s income came from. Technically speaking, the fourth category means that you should be reviewing that company’s internal end-of-year reports to see if at least 75% of the revenues for the year come from within the U.S.

Check your investments

Knowing that you need this information from your investments accounts, you will soon discover that every mutual fund and ETF holds a long list of investments, and that the managers who choose them don’t really care about your tax treaty problems. So, what can you do?

First, don’t stress too much about the tiny bits of income from holdings in your investment account. To date, the French tax authorities have been very reasonable with taxpayers who are trying to get this right.

Next, be careful about using ETF’s (“Exchange Traded Funds”) and mutual funds. There are quite a few out there that by definition limit themselves to U.S. public traded companies. Likewise, bond or bond funds that limit themselves to federal government bonds or municipal holdings are absolutely fine.

On the other hand, a fund that is geared toward international companies or anything traded as an ADR almost certainly runs afoul of the tax exception. And most ETF’s and mutual funds will have a mix. Unless you want to take up a second job analyzing a fund’s holding-by-holding performance throughout the year, avoid those.

Finally, check any investments you have that are not listed on the big exchanges. This could be something you personally bought into, something you inherited or more often, some shares you got from a company you worked for. If you know without a lot of research whether the company meets the criteria for the French exemption, great. If not, consider the possibility that it does not. You might even look at relinquishing those holdings.

Hold the international investments in France

If you decide that those international shares are not best in the U.S. investment account, you should consider your investment account options in France. And for those, European holdings are actually preferable. Check this article on the PEA, for instance.

How to get help with your US tax reporting requirements

Taxes are an important part of finance. But for most of us, they are not the most important part. In the vast majority of cases, earning, spending and saving (in that order) are what determine our long-term financial well-being. And help is at hand. At Sanderling Expat, we’ve assisted many US expats to review their investments, make the right choices for what, when and where. And we help create the correct paperwork for US tax reporting – so that the important things can be enjoyed.

Find out more and get in touch with Sanderling Expat Advisors at sanderling.com

The post US Expats – France or US for Investments appeared first on The Good Life France.