Monday, 19 November 2018

Brexit and the exchange rate

4 potential scenarios as we see them


Just over one week ago, the GBP to EUR exchange rate had hit the best price in over a year with hopes that a new Brexit deal was ready to be done- these hopes were quickly dashed after the cabinet had actually approved the deal followed by several high profile resignations in Govt.

Since then there have also been calls for a vote of no confidence in the Prime Minister with some letters actually going into the 1922 committee - today, it not known whether there are enough letters to trigger this challenge or not.

Over the weekend, the PM has been actively promoting her deal around to gain support- and it seems that many members of Government are willing to back the PM, but perhaps only after some changes to the current deal.

At this point, it is pretty unclear which direction things will move - the 4 potential scenarios we see are :
  • The UK & EU conclude the deal, and it is approved by House of Commons (leading to Sterling strength)
  • The UK & EU make their deal, and it is voted down by the House of Commons- potentially triggering a vote of no confidence in Theresa May (Undoubtedly this would lead to Sterling weakness)
  • An immediate vote of no confidence (Again creating Sterling weakness)
  • Changes to the deal being made, and then being presented to the EU (One assumes resulting Sterling strength)

Economic news and figures are irrelevant while this all of this is happening- as the £ will only really move on political news.Therefore if you have an upcoming transaction please speak to us and our currency partners about methods to hedge yourself against the volatility in the market.

Email me sales@allez-francais.com


Monday, 8 October 2018

Implementation of PAYE system in France from January 2019



After years of promises, discussions and abandoned reforms, France is finally ready to change the way income tax is collected. As from 1 January 2019, France will operate a pay-as-you-earn (PAYE) system.

How is the French tax system changing?

Currently, French tax residents file an annual income tax return and pay their income tax the year after the income was received. This is done through a one-off payment, three monthly payments or ten monthly payments based on the previous year’s taxes. As a result of the new French tax law, from 1 January 2019 French tax residents will be subject to a monthly withholding tax on their income for that year. So, in 2019 they will pay tax on 2019 income rather than paying the 2018 income tax when they file their 2018 tax return. This affects anyone living and/or working in France with French and foreign source income, as well as non-French tax residents with French source income.

Complex tax reform

The way French tax is calculated (joint tax return for households/numerous tax deductions and tax credits), and the specific French filing tax requirements which imposes a tax return to be filed the year after the income is received, will be maintained. This causes complexity, particularly for investments decisions in 2018 and in 2019 when the new system is implemented. Not all income will be subject to the new withholding tax system.

The following types of income will be subject to the new PAYE system:


• Employment income/salaries (excluding wages paid by non-French legal employers through a payroll outside France)
• Taxable state benefits (e.g. sickness, unemployment)
• Retirement income (pensions, lifetime annuities)
• Maintenance payments
• Non-French income taxable in France (including UK pensions paid to a UK retiree
• resident in France)
• Rental income (including French property rental income of UK residents)
• Business profits
• Consultancy fees / independent income

The following types of income/gains will be excluded from the PAYE system:

• Investment income (i.e. dividends or interest) including gains from life insurance policies
• Capital gains deriving from real estate property and financial investments (e.g. sale of
• stocks/shares)
• Non-French income which is subject to French tax credit in accordance with a double tax treaty (UK rental income of a French resident falls into this category)


How PAYE will be collected at source


1) Collected by the paying agent through the PAYE system. PAYE on French source salaries, French source pensions and state benefits will be collected at source by whoever pays them. For salaries, it will be employers; for pensions, the pension administrators, and for unemployment benefits, the national unemployment agency. The collecting agent is solely responsible for collecting the correct amount of tax and taxpayers themselves cannot be held liable for any errors or omissions.

2) Collected by the French tax authorities through monthly direct debit from the taxpayer’s bank account. For all other types of income (including business profits and independent income, rental income, maintenance payments, purchased lifetime annuities and non-French source income concerned by the PAYE), the French tax authorities will collect the tax either monthly or quarterly by direct debit from a bank account provided by the taxpayer. The monthly debit will represent 1/12 of the 2017 income tax as calculated at the bottom of the last tax bill issued in August. The taxpayer will incur penalties if the tax authorities are unable to collect the tax, for example due to insufficient funds in the account.

Investment income not affected by the PAYE system

All other income not impacted by the PAYE, such as interest, dividends, capital gains, gains from life insurance policies (depending on the contract’s date) will continue to be subject to the 30% flat tax rate. As now, the taxpayer can elect for the progressive income tax rate instead (keeping in mind that this election must cover all their income). For the year 2018, with the application of the new system of taxation, the 30% flat tax rate applies to all the gains deriving from investments made after 27 September 2017.

The favourable income tax rate of 7.5% granted to policies held for eight or more years is still applicable to policies which do not exceed €150,000 per person (€300,000 for a joint policy). For investments made before 27 September 2017, tax can still be paid under the “Prélèvement ForfaitaireLibératoire” system to benefit from the income tax rates of 7.5% and 15%. Policies held for more than eight years will continue to receive the €4,600 allowance (€9,200 for married couples / PACS partners).

The existing “Prélèvement Forfaitaire non Libératoire” system for paying tax on foreign source dividends and distribution applies to Assurance-Vie gains deriving from investments made after 27 September 2017. It is French tax residents’ responsibility to file a specific tax form and pay the 30% flat tax by the 15th of the month following the withdrawal. You should take personalised, professional advice to establish which would be the best tax option for you when filing your tax return.

Rates

The taxpayer can choose one of the following three options to determine the withholding tax Rate for the PAYE:

1. The average income tax rate applied the previous calendar tax year (so year 2017 for 2019 income) and which is specified on their last tax bill issued in August/September.

2. Joint filers may also request separate rates depending upon their respective incomes.

3. In the absence of the known tax rate, a “neutral rate” may apply for employees.

There will be a certain degree of flexibility for an individual to increase or decrease their withholding tax rate. Adjustment must be requested via the taxpayers’ online tax account on the Ministry of Finance website www.impots.gouv.fr. The local tax centre will be responsible for calculating the revised withholding tax rate and transmitting this to the employer.

Income tax return

There will still be an obligation to file an income tax return in the year following that in which the income was received. The tax return for income received in calendar year 2018 will be filed in May/June 2019. Any balance of tax due must be settled by the end of the year (penalties will apply for non-payment). Or, where applicable, the tax authorities will refund any overpayment.

2018 = ‘Blank year’? Tax-free year or ‘Année blanche’

If you hope to qualify for a tax-free year or “blank” fiscal year for 2018, you may be disappointed.

2018 income will still have to be declared, but it will be neutralised by the CIMR tax credit – (“Crédit d’Impôt de Modernisation du Recouvrement” or “Tax Credit for the Modernisation of the Recovery”.) Exceptional income and excessive increases in current income will not be neutralised by the CIMR and will therefore be taxed. Exceptional income not neutralised by the CIMR (and therefore taxed for the year 2018) includes: severance pay of employees and compensation paid to corporate officers; pension benefits paid in the form of capital; sums withdrawn on a Salary Savings Plan, and in general, any other income which is not likely to be collected annually.

When it comes to rental income, independent income and business income, limitations have been set up to avoid taxpayers receiving higher income in 2018. For 2018, with the calculation of the CIMR, taxable income will be taxed at the average rate of tax and not the usual marginal tax rate. This could be interesting for taxpayers who received gains from an insurance policy and benefit from the 12.8% flat tax rate.

This new PAYE system is an interesting development for France and will be of benefit to those receiving French source employment or pension income. Those receiving investment income or foreign pension income should clarify what, if anything, they need to do and what their options are.



Article kindly provided by Blevins Franks with thanks also to Catherine Terry, Tax Lawyer, catherine.terry@terry-avocats.com, for providing information on this complex French PAYE tax reform.

Monday, 24 September 2018

Sterling Hit by Serious Brexit Turbulence


Week of Weakness for GBP/EUR on Brexit Fears

Last week was one to forget for Pound traders, with GBP/EUR exchange rate gains made from Monday to Thursday being erased by a sharp drop on Friday.

Sterling initially rose when higher UK inflation and resilient retail sector stats came out, but gave it all away to Brexit fears sparked by an EU summit.

Prime Minister Theresa May attended a meeting of EU leaders in Salzburg but left under a cloud after her ‘Chequers plan’ for Brexit was roundly rejected.

Amid growing fears of a no-deal Brexit outcome, Mrs May held a conference on Friday and further devalued the Pound by declaring Brexit talks to be ‘at an impasse’.
Euro Outlook: Volatility ahead on Inflation and Expectations Data

Barring any surprise statements on Brexit this week, the Euro is likely to be the dominant currency in the GBP/EUR pairing until Friday.

This morning’s Ifo measures of German economic confidence could cause early EUR/GBP exchange rate losses, as all three surveys are expected to show falling sentiment.

The Euro might make additional losses on Thursday morning, as a spread of Eurozone economic confidence measures are also forecast to decline.

The main data releases to watch out for are September’s business and consumer confidence measurements, both of which are tipped to show falling figures.

What may be a bad week for the Euro could continue on Thursday afternoon, as some economists predict that Germany’s year-on-year inflation reading for September will drop from 2% to 1.9%.

Lower inflation in Germany risks causing lower inflation rates across the Eurozone, which in turn reduces the likelihood of a near-term European Central Bank (ECB) interest rate hike.

The UK will finally have a look in on Friday, with a consumer confidence reading followed by GDP growth rate figures.

The first of these, GfK’s consumer confidence data, could weaken Sterling if it shows lower consumer sentiment.

More positively, however, final UK Q2 GDP readings are tipped to confirm growth during the quarter – this could boost Pound Sterling demand.

Despite possible late-week GBP relief, however, the Euro still has a greater chance of rising against the Pound on Friday if German unemployment falls and Eurozone-wide inflation is reported higher.


Key Events

24th September

09:00 Ifo German Economic Confidence Surveys

27th September

10:00 Eurozone Business Confidence

10:00 Eurozone Consumer Confidence

13:00 German Inflation Rate

28th September

00:01 UK GfK Consumer Confidence

08:55 German Unemployment Rate

09:30 UK Q2 GDP

10:00 Eurozone Inflation Rate


Article courtesy of Foremost Currency Group


Friday, 17 August 2018

Radon – a new diagnostic report




Very recently, the purchase of a property in France has had yet another diagnostic report added to the lengthening list.


This time it is called E.R.P (Etat des Risques et Pollutions) regarding Radon, to replace ESRIS (État des Servitudes 'Risques' et d'Information sur les Sols).

Quite a large part of France is potentially impacted. The map below gives a general overview.




Within the zones highlighted, there are areas where there are volcanic or granite areas, plus some sandstone areas which can be affected. 

The degree of Radon could be very localised, and can vary significantly even within a small commune.
Radon is everywhere, as it is formed from the uranium in all rocks and soils. Outdoors everywhere and indoors in many areas the radon levels are low and the risk to health is small. The darker the colour on the Radon maps the greater the chance of a high radon level in a building. However not all buildings, even in the darkest areas, have high levels.
If you have a home in a Radon risk area, then you can undertake significant work to improve your rating. The aim of remedial work is to reduce radon levels as low as possible. There are several methods that can be used to reduce high radon levels.

Some simple actions such as sealing around loft-hatches, sealing large openings in floors and extra ventilation do not reduce radon levels on their own. When combined with other effective measures, they can improve the reduction of radon levels. Completely sealing floors is difficult and can cause rot in wooden floors.



Below is a map of the UK, identifying areas affected by Radon



Thursday, 9 August 2018

Making your money go further to get you that dream French property



At Allez Francais, we want to make sure that your hard earned money goes further for your French house purchase.

That is why we are offering a cash incentive of 100€ when you make your first trade via our dedicated currency partners - Foremost Currency Group*.

On average they beat the banks rates by around 3% - meaning on a transaction of 250,000€, you could save a whopping 7,500€ (for example).

If you were able to secure a 3% reduction on the price of your house wouldn’t you be delighted?

How do I get 100€?


All you need to do is e-mail sales@allez-francais.com and ask us to refer your details to our broker Adam Bobroff, Director at Foremost Currency Group.

Adam (or a member of his team) will then contact you about preferential rates on your currency exchange.

*100€ offer available on your 1st trade per household only. Subject to a minimum value of 100,000 Euros.


Saturday, 4 August 2018

Figure it out


The following is a slightly amended version of an exchange that I have had with a vendor during the course of this week.

They purchased their home in France in late August 2015 for a figure of 265,000 € (inclusive of agency and Notaire fees). Fast forward 3 years and they have to sell because their circumstances have changed significantly, so they have been on the market for 2 months.

Today we have an offer for them at 242,500 € (net vendor), which they have initially refused, because they are "losing money" on the sale.



To them, the house cost 265,000 and they would effectively lose 22,500 € by accepting the offer that is on the table today. I have subsequently had a conversation with them about the real cost to them, rather than what appears on paper. If you think about it, the figures in Euros are the paper figures, and the real cost is what they paid in Sterling, and what they will get back in £s when the money is repatriated.

Looking more closely at the figures, it became evident that 265,000 € had actually cost below £200,000 (in fact £196,295) when the currency was purchased via our dedicated dealers in August 2015. Accepting the offer of 242,500 € today would yield £212,720 if they lock into a forward contract. So, rather than a perceived loss of 22,500 €, the client is now actually making £16,425 in the currency that really matters to them going forwards - Sterling!

Sometimes, even seemingly intelligent people do not see this, and we need to paint the picture for them. They are not alone, there are many out there who don't see the logic here and focus blindly on the Euro figure.

Incredible that if you take the absolute £ low and the £ high over this 5 year period there is a difference of 33.44%. That is truly massive - and really is over the 2015-2018 period rather than the whole 5 years.

Friday, 3 August 2018

8 sizzling reasons to buy property in south west France today!


Prices are stable and if anything increasing steadily. Nothing spectacular, but none of our sales have been for heavily discounted deals. Several sales have achieved full asking price, all sure signs of a steady market. Value for money has never been an issue here in South West France.

Mortgage rates are still incredibly low in France. For example, via our own dedicated French broker we have access for our clients to rates as low as 1.25% over a 10 year period. This rate is so incredible that cash buyers are deciding to retain their capital liquid, and borrow even though they have no real need to do so.

Lifestyle - everyone relaxes when they come to France. The rat-race and stress are well and truly left behind when you arrive south of the Loire Valley. Enjoy the many festivals and farmer's markets that are there to enjoy throughout the summer months.

The weather in general this summer has been exceptionally good, but in France we have been able to enjoy gloriously long sunny days, with balmy evenings that are just perfect for a BBQ or drinks. Do beware of the extra powerful rays of the sun however, and use a sun screen.

Our selection of houses just gets better and better. How? Like the man from John West or Del Monte (do you remember the adverts), we only take on the best. Around 40% of the houses offered to us by vendors are not accepted, because they do not meet our strict criteria for quality and value for money.

Retirement - With its unbeatable food and wines plus that laissez-faire attitude, there is simply nowhere better to retire than France. Many of our clients have retired to France and are now fully integrated into their « communes ».

Healthcare - as the demise of the NHS continues, France's health service provides world quality support and treatments. Virtually no waiting lists and immaculately clean, modern hospitals.

Viewings - need to be confirmed well in advance, normally 7-10 days minimum. Especially during the month of August, (when we also take a few days off), forward planning is essential.

Finally, congratulations to France's victorious football team at the World Cup 2018, and also to Geraint Thomas for winning the Tour de France 2018. Allez!

Friday, 27 July 2018

Which Brexit deal?



With the UK on course to leave the European Union in March 2019, the country faces 4 potential end case scenarios. We have heard about Hard Brexit, Soft Brexit, Customers Partnerships and the Norway model, but realistically there are now only 4 options left.....

Leave with a deal


Both the UK and the EU state they want as amicable a divorce as possible, with a legal agreement setting out the kind of relationship they will have when the UK is no longer a member of "the club".

The Prime Minister's present plan involves close ties with the EU in certain areas, most notably trade in agricultural products and allowing skilled migrants access to jobs in the UK. The plan she says will allow Britain to take back control of its laws, money and borders, as people voted for in the 2016 referendum. But it has been attacked as an unworkable compromise by people from both the "Remain" and "Leave" campaigns. Let's not forget, the EU may also decide to reject it ! Mrs May has appointed herself now as Chief Negotiator.

No deal


A clean break from the EU. Most likely, in this scenario, the UK would fall back on its membership of the World Trade Organization (WTO), the global body governing international trade. UK exports to the EU would be subject to the same customs checks, requirements and taxes that the EU currently imposes on countries like the USA. Many commentators feel that this would be catastrophic for British business. It would probably create chaos at the borders. Not really an acceptable option.

Remain in the EU


The UK triggered the mechanism to leave the EU and the back stop date is 23:00 on 29 March, 2019. A complete U-turn would involve huge loss of political face, and possibly require a new PM, with the backing of voters in a general election. Interestingly, European Council President Donald Tusk has said he believes Brexit can be halted.

A less formal version of staying in the EU would be if the UK manages to strikes a deal that keeps it in the EU's trade arrangements. That is to say the customs union and the single market - and agrees to free movement of people and the jurisdiction of the European Court of Justice. This would amount to staying in the EU, Brexiteers will argue.

Hold another referendum


The UK government has ruled this out but there have been a number of people calling for a fresh vote. Parliament is clearly split over what kind of Brexit it wants. So, a 2nd referendum on the final deal agreed by Theresa May in Brussels might yet end up being the only way to break the deadlock.


Tuesday, 10 July 2018

Top 10 tips to help you plan your property visits


1.

Don't try to visit too many houses. 4 or a maximum of 5 in a day is plenty. Even with digital cameras to help your memory, everything with go into a blur at the end of the day. Focus upon quality rather than quantity.

2.

With that in mind talk to your agent well ahead of your visit. Don't rely upon e-mail exchanges. Share with us your wish list and tell us what to avoid.

3.

Plan your days in advance. Distances in France can be deceptive. Check your approximate journey times between properties - are they realistic. If you need guidance, ask us!

4.

If you like a property, and are interested then ask to spend a bit more time there. If possible have a drink with the owners, and picture yourself in the house.

5.

Keep an open mind. It is amazing how many buyers end up purchasing something that they told us to avoid to start with.

6.

A long day in the car poses a few problems, especially if you have children on board. Come prepared with a snack and some drinks.

7.

 Allow ample time in your schedule to return for a 2nd visit to the property.

8.

 Be street wise. If you are a UK buyer be aware of what the £ is doing. If you need a mortgage, talk to us about your options. There are some great deals out there ...

9.

France is an enormous country with a wide diversity of climate and landscape. It has mountains, hills, flat areas, lakes, rivers, lots of coast, many pretty villages, and bustling towns. Which offers you the lifestyle that you want?

10.

Finally, be courteous. If you are delayed call your agent to advise. Shake hands and greet the owners if they are present. They will probably disappear unless you have important questions. But this sort of French protocol is important and does help.

To view our current portfolio visit www.allez-francais.com - or contact us by email sales@allez-francais.com  



Friday, 29 June 2018

Choosing the right agent and the right mandat in difficult circumstances

In our Property Blog we always try to provide some useful information, or focus upon the positive things that happen during our day to day events in France.

Sadly, as we all know, everyday cannot be like that. There are frustrations, challenges and many obstacles that we face - and we take those on the chin. There are some days however that just p*ss you off. They don't need to happen.

My most recent example was a visit to a lovely French lady in her 70s. Recently widowed, still emotional, and certainly vulnerable she has to sell her house now. The gardens are too big, the house is too large also, and she doesn't want to be isolated, away from friends and relatives.

Having visited her 3 times to explain who we are and how we work, she signed up for an exclusive mandat, also not wanting the involvement of local agents, as she is very convenient for them to just "pop by" with clients who are effectively in many cases just "tourists".

Having taken great care to clarify that we would only bring "qualified" clients, and with appropriate warning, by appointment, she was visibly relieved and a smile appeared on her face for the first time.

Rather annoyingly, within 2 hours of the property being published on our website, she was subjected to a telephone interrogation by a local agent, who clearly recognised the property. The call was not only unsolicited, but aggressive, and totally lacking any empathy for her situation.

I find it amazing that these agents work so hard to watch what is happening on our website, when they are so ineffective at selling similar properties on their books already, principally because they are sat over the road taking a coffee or on a smoking break.

Certainly if as much effort went into selling their own houses as they put into their jealous responses to our success, then they might discover how to do the job professionally and win some friends at the same time.

A property description consists of more than a couple of lines or 50 words. For images, you need quality pictures, generally taken on a tripod, and not hand held out of focus images with the washing on display.

Rant over - but still feeling somewhat annoyed!

Wednesday, 16 May 2018

GDPR - what is all of the fuss ?

You cannot have escaped the avalanche of contact that you are receiving concerning the General Data Protection Reglementation.

The temptation is to skim read the material and then ignore. Please don’t !

Otherwise you will miss out on the latest property information, price reductions, new listing etc. We can only assist you if we have your approval !!

How we use your information

This personal information we collect allows us:

a) To provide you with the information, products and services which you request from us

b) To contact you to answer your request

c) To analyse and improve our websites to ensure that content is presented in the most effective manner for you, your computer & to measure / understand the effectiveness of our advertising (non personal data)

d) To provide you with information about other goods and services that we offer in respect of GDPR, that is to say with your confirmed consent to receive our mailings and / or other information

Click here to subscribe and consent to receive our monthly newsletter: http://eepurl.com/bo_CIX






If you are not satisfied about the way in which your information is handled you have the right to lodge a complaint to the French Information Commissioner's Office - la CNIL https://www.cnil.fr/fr/plaintes/internet

Saturday, 24 March 2018

Brexit: how things stand for expatriates in the EU under the proposed Brexit deal



With only one year to go until Britain officially leaves the EU, we explore how things stand for expatriates in the EU under the proposed Brexit deal.

Residency: What we know

Although Brexit is scheduled for 29th March 2019, a proposed 21-month transition period is expected to maintain existing residency rules and benefits until the end of 2020.

Britons “lawfully residing” in an EU member state before the 31 December 2020 cut-off date will retain the right to remain and access existing benefits in that country after full Brexit takes effect.

Those who already hold permanent residency can convert their documentation for free. Others are promised a “transparent, smooth and streamlined” process, with a two-year application window.

Agreed reunification rights mean existing partners and close family members can join settled residents in an EU country, even after Brexit.

However, residency rights expire if you are absent from the country for five continuous years or more.

 

Residency: What we don’t know


What counts as “lawfully residing” is unclear. Permanent residents will qualify, but expatriates living in a country for under five years may need to prove their settled status.

If you have not already, make sure you have registered with the local authorities and secured any supporting paperwork. The residency process takes time, so take action as soon as possible to avoid missing the cut-off date.

Beyond Brexit, we do not know how acquiring residency, visas and permits will work, but we can expect them to be much less straightforward than today.

A key unresolved issue is onward freedom of movement – whether you can automatically relocate to another EU country after Brexit. This especially affects those who work or wish to study across different member states. While Britain has offered “guaranteed rights of return” to EU citizens settled in the UK before Brexit, so far the EU27 has not agreed reciprocal rights for Britons.

Healthcare and pensions: What we know


The deal on the table preserves existing access to pensions and healthcare for residents legally settled in the EU before Brexit. This means holders of the EU ‘Form S1’ can continue receiving free or reduced healthcare, and the European Health Insurance Card (EHIC) still provides cover when visiting other EU countries.

British expatriates remain eligible for annual increases in the State Pension, even if you have not started taking your pension before Brexit. As things stand, Brexit will not affect how you can withdraw or transfer UK pension funds.

Pensions: What we don’t know


Post-Brexit, the UK no longer has to abide by EU rules on freedom of movement for capital; this could lead to increased taxation of UK pension withdrawals and transfers.

Last year, the UK introduced a 25% tax on transfers to Qualifying Recognised Overseas Pension Schemes (QROPS) located outside the EU/EEA. Some speculate that this could be extended to within the EU once Britain sheds its obligations to the bloc.

As such, there may be limited time to transfer UK pensions without tax penalties. Make sure you take personalised, regulated advice before taking any action with your pensions.

Taxation: What we know

Each country sets their tax rules, not the EU, and tax treatment depends on whether you are resident, not your nationality. Brexit itself therefore has no effect on how Britons are taxed inFrance or elsewhere in the EU. However, under current rules, some non-EU/EEA assets are taxed differently.

A financial planning review can ensure your wealth and assets are structured as tax-efficiently as possible and prepare you for any Brexit implications.

Taxation: What we don’t know


Tax rules are always subject to change, even without Brexit. The main threat here comes from the UK; as the government loses its EU commitments it gains more freedom to tax nationals living in Europe. As already mentioned, pensions could be a key target.

Another could be tax relief rules for expatriates. For example, in recent years the government has threatened to remove the personal income tax allowance from non-resident British nationals. Taking this away from expatriates post-Brexit could be a relatively easy way for the Treasury to boost revenue in the future.

While the proposed withdrawal agreement and transition period provide some reassurance for expatriates, the final deal is not signed. With only months of certainty left, make sure you do what you can now to secure your position in your EU country of choice. A locally-based adviser can help you understand the cross-border implications and prepare appropriately for the post-Brexit world.

 
 

Article courtesy of Blevins Franks – they accept no liability for any loss resulting from any action or inaction or omission as a result of reading this article, which is general in nature and not specific to your circumstances. Tax information has been summarised; individuals are advised to seek personalised advice.

Sunday, 18 March 2018

Private sales - don't do it !



In the traditional real estate market, sellers and buyers in France & the UK, rely on estate agents to find buyers and agree / close the deal.However, some sellers forego the help of an agent and do a For Sale by Owner (FSBO for short). Many follow this approach because they want to avoid the dreaded word – “commission”.

Typically, estate agents charge anything from 4 - 8% of the sale price as a commission. This fee is always included in the advertised price, so regardless of how the contract is worded, the buyer pays the agency.

However, property owners are not as well informed as estate agents, despite what you think about an agent!

Many vendors make mistakes when doing a sale on their own, which could be avoided with the help of an estate agent.

Some of the adverts on Private Sale sites, and many of those on Facebook are truly cringe worthy. Absolutely awful in terms of information and images!

In addition, most houses on the market for sale by the owner, are on the market at significantly inflated prices as the sellers make the mistake of overpricing the property.

Meanwhile, a good estate agent has experience in how to correctly price properties, has access to a range of tools and data to help them accurately calculate the price of a property.

Moreover, some are do not have negotiation skills or simply possess the knowledge to smoothly and successfully close the transaction. Offers and negotiations often bring out the animal in individuals, as we know only too well.

Finally, the FSBO process can be emotionally difficult for sellers who are personally attached to their home and have a hard time of letting them go. This is, in fact, a reason why so many owners overprice their properties as to them their homes have sentimental value.

Quality of sale – estate agents are expert in the preparation of their sales particulars, and a DIY approach could put off a lot of serious buyers or make others think ‘where else in the house has the homeowner cut cost’.

An experienced estate agent is backed by a wealth of information about the housing market, both their own recent sales prices, competitors, valuations from their Notaire contacts, the statistics available both regionally and nationally. Estate agents live and breathe houses every day which makes them well-equipped to know the do’s and don’ts.


Sunday, 25 February 2018

The clock is ticking to lock-in residency benefits in France post-Brexit



British expatriates in France should act now to secure residency and take advantage of healthcare and pension opportunities before Brexit changes the rules.

This month’s Chinese New Year celebrations bring to mind a Chinese proverb that never dates: ‘dig the well before you are thirsty’. In other words, make sure you plan for your future needs early, before it becomes too late.

Such wisdom has particular relevance amidst today’s Brexit uncertainty. Despite many unknowns, now is the time for Britons living in France to take action to protect their position. We explore what you can do to secure the key areas of residency, healthcare and pension benefits in a post-Brexit world.

Residency and Brexit


December brought reassuring news for expatriates as the UK and the EU27 agreed to maintain existing residency rights for Britons settled in the EU. A joint statement confirmed that citizens “lawfully residing” on both sides can continue "to live, work or study as they currently do under the same conditions as under Union law".

So as long as you are legally resident in France at the Brexit cut-off date, you should keep the right to stay and access the same benefits as today for as long as you remain resident.

The most secure position is permanent residence, available after a period of five continuous years living in France. While you will not qualify if you have lived in France for less than this, you may still be considered French resident for tax purposes. If you have not already registered at your local tax office, do so urgently to ensure your position is formally recorded. You could also consider applying for a ‘carte de séjour’ – although some Britons have been told they need not apply yet as this document is not required for EU citizens, it is still legally possible to obtain. This can help demonstrate that you are legally resident in France before the Brexit cut-off date and therefore eligible to benefit from the citizens’ rights agreement.

Those thinking about moving to France should act fast. While it may seem like Brexit is still a long way off, there is already an administrative backlog for residency applications and a surge of interest is likely closer to the cut-off date. Even if you would prefer to wait until more practical Brexit details are known, it is a good idea to relocate and start the residency process – as an EU citizen under current rules – as soon as possible. Post-Brexit, we can expect the requirements, time and expense for acquiring residency to be much less straightforward than today.

Securing healthcare


Under the existing Brexit deal, settled residents can continue receiving reimbursements for certain healthcare costs. This means the Form S1 system will carry on providing free cover in France for British pensioners, and holders of the European Health Insurance Card (EHIC) remain eligible for free or reduced healthcare when visiting another EU country on a temporary basis, such as holidays.

To secure residency in France, you may be asked to show evidence of ‘comprehensive’ health cover. If you do not hold Form S1, you may therefore need to join the French healthcare system (a process that can take weeks) or prove you have sufficient private health insurance to qualify. Note, however, that being affiliated to the French social security system has potential tax implications, so take advice to assess your options.

Pension options


The UK has committed to continue yearly cost-of-living increases to State Pension payments for retired Britons living in the EU post-Brexit. As a result, British pensioners in France will receive annual increases linked to the ‘triple lock’ – whichever is highest out of the rate of inflation, earnings or 2.5% – until 2022.

When it comes to private pensions, current opportunities may not survive Brexit. Today, UK pension contributions and growth both benefit from tax relief in Britain, and can potentially be accessed by expatriates without paying UK tax (under double tax agreements). While this is unlikely to change with Brexit, the government may want to stem the flow of UK pensions abroad and keep more funds within taxable range.

Currently, it is possible for French residents to transfer UK pension funds to a Qualifying Recognised Overseas Pension Scheme (QROPS) in the EU or European Economic Area (EEA) tax-free. Doing this can unlock tax efficiency, estate planning advantages and currency flexibility. However, since 9th March 2017, transfers to QROPS outside the EU/EEA attract 25% UK taxation (unless you live in the same jurisdiction as the QROPS).

Post-Brexit, the UK could potentially limit how expatriates in France can access their pensions by widening this taxation net, or by making it harder to cash-in UK ‘final salary’ pensions tax-efficiently. Consider acting now under current rules, but take personalised, regulated advice to ensure a suitable approach and avoid pension scams.

A realistic timeline


Although the Brexit date is currently set for 29th March 2019 – and could potentially be extended by a transition agreement – it is sensible to work towards a much shorter deadline. If you cannot take action immediately, make sure you have put processes in place by September 2018 to allow at least six months before the Brexit clock runs down (pension transfers may need even longer).

Even if you are already permanently resident in France, do not wait for the final Brexit details to be confirmed before reviewing your situation. With just a few months of certainty left, now is the time to explore your residency, estate planning, investments, pensions and general tax planning options.

With suitable planning – done early – you can make sure you are in the best position possible to continue enjoying your life in France as you do today. A locally-based financial adviser who understands the interaction between both the UK and France can help you take advantage of opportunities and find the best solutions tailored for you as an expatriate, during the Brexit countdown and beyond.




Article courtesy of Blevins Franks

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals are advised to seek personalised advice.

Blevins Franks accepts no liability for any loss resulting from any action or inaction or omission as a result of reading this article, which is general in nature and not specific to your circumstances. 


Thursday, 1 February 2018

What can expatriates in France do with their UK pension in 2018?

What are today’s options for expatriates in France with UK pensions and what can you do to ensure financial security in retirement?

When it comes to pensions, your long-term financial security is at stake, so take care to do what is right for you and your family. Expatriates also need to consider the tax rules and implications in France.

Start by understanding the options available for different pension types.

‘Defined contribution’ or ‘money purchase’ pensions


These pensions are made up of what you have paid into the scheme alongside employer contributions, tax rebates and investment growth. Examples include individual or group personal and employer pensions and Self-Invested Personal Pensions (SIPPs).

Since the pension freedoms of 2015, members of these schemes can usually do the following from age 55:

  • Take the whole fund as cash – 25% (the ‘Pension Commencement Lump Sum’ - PCLS) will be tax-free in the UK.
  • Make cash withdrawals when you want – unless you have already taken the PCLS, a quarter is free of UK tax each time.
  • Take regular income through ‘flexible drawdown’, leaving the remainder invested.
  • Take a secure, regular income for life through buying an annuity
Expatriates also have the option to transefr Uk pension funds to a Qualifying Recognised Overseas Pension Scheme (QROPS). QROPS benefits include flexibility to pass pension benefits to chosen heirs and to take income in Euros instead of Sterling. Once in a QROPS, funds are protected from lifetime pension allowance penalties and future UK taxation.

However, QROPS benefits and rules can vary between providers and jurisdictions, and a 25% UK tax charge applies on transfers to QROPS outside the European Economic Area (EEA) or Gibraltar. As transferred funds remain liable for five UK tax years, you risk being penalised if you become tax resident in a non-EEA jurisdiction within that period. It is important to take professional advice to first establish if transferring is suitable for you and then navigate the complex options.


‘Defined benefit’ or ‘final salary’ pensions
Here, your employer guarantees a proportion of your salary for the whole of retirement. As benefits last a lifetime and are often generous, these are viewed as ‘gold-plated’ pensions.

While you cannot usually withdraw cash from these pensions, you can transfer it to a defined contribution scheme or a QROPS. Traditionally, this has been considered less attractive than drawing a guaranteed pension for life. However, today, some struggling providers are tempting members to cash-in with ‘transfer values’ of up to 40 times the annual benefits due at retirement. Although a one-off sum could potentially provide a retirement income that exceeds the original annual payment, it is crucial to fully understand the consequences before giving up ‘gold-plated’ benefits.

Whatever type of pension you have, consider certain issues before making any decisions.


Taxation
While a quarter of a defined contribution scheme can be taken tax-free in the UK, French residents are liable to French taxation at the income tax scale rates up to 45%. Only withdrawals prompted by an ‘accident of life’, like invalidity, unemployment or death of a spouse, are exempt.

It may be possible to limit French tax on a UK lump sum to just 7.5% - with an uncapped 10% allowance – in certain circumstances. Generally, you must take the whole fund at once, so you may be ineligible for this rate if you have already started taking benefits.

All pension income also attracts annual social charges of 9.1% (7.4% previously), unless you hold EU Form S1 or do not have access to the French healthcare system.


Making your money last

Having the freedom to withdraw or transfer your pension does not mean that you should. You may even be better off taking no action at this time. If you choose to take some or all of your benefits as cash, make sure you have a plan to fund your long-term future that suits your personal circumstances and goals.

The threat of losing it all


Pension scams have never been more widespread and sophisticated – Age UK estimates £43 million has been lost to scammers since April 2014. Generally, if an investment sounds too good to be true, it probably is. Once you transfer your pension, it is too late.

Also, beware that many companies offering pension services are unregulated. Whether they aim to defraud you or not, unprotected investments risk losing your money, with no recourse if things go wrong.

Even amongst regulated providers, check for quality. The UK Financial Conduct Authority (FCA) found that less than half of those cashing in final salary pensions received suitable advice. Make sure your adviser takes account of your needs, objectives, personal circumstances and risk appetite to find a tailor-made solution for you and your life in France.

Getting it wrong could have serious and unexpected consequences. Take the time you need to do your research and establish your best approach for a prosperous retirement.



 

Article courtesy of Blevins Franks


Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual is advised to seek personalised advice

Monday, 8 January 2018

A new year resolution to review your financial planning for France



The New Year is a perfect time to review your financial planning for France. Is it up to date? There are various elements you should consider, from investments, to pensions, to tax and estate planning.

Here we are, at the start of another year. For many it is a time of looking forward, to what we expect 2018 to bring and how we can make it a happy and successful year. From a financial planning perspective, this is a good time to review your existing arrangements and establish if you need to make changes for 2018 and beyond.

We recommend you do this around once a year; particularly to look at your investments, but also your tax and estate planning and pensions. If you have not done this in a while, the New Year is a good prompt to do so.

Tax planning

With tax planning you need to consider any rate or regulation changes over the last year and whether they mean you need to make adjustments. And of course in France we have two significant changes starting from January 2018:

  1. Wealth tax as we knew it has been repealed and replaced by a new version. The rates and rules are similar but it now only applies to real estate (savings and investments are exempt).
  2. Investment income is now taxed at a fixed rate of 30%, including social charges (though smaller policies can still apply the scale rates of income tax).
While these are both tax cuts, it is worth looking at your tax planning again to ensure you can take full advantage of these reforms.

If you are thinking of investing in property, first look at the tax implications and compare how much tax you would pay compared to investing in securities like shares and bonds. Consider wealth tax, capital gains tax and tax on income (rental income does not benefit from the 30% fixed rate).

If you are new to France it is even more important to review your tax planning, since the opportunities for tax mitigation are very different from the UK or elsewhere. What was tax efficient in the UK is unlikely to be so in France. You may need to make changes to secure an appropriate strategy that reduces your liabilities to the legal minimum and preserves your wealth for you and your family.

Estate planning

There have not been any major changes since the EU succession regulation “Brussels IV” came into effect in 2015. So estate planning done over the last couple of years should still be effective. But if you have not established a thorough estate plan since moving to France, or in recent years, do so now, before it is suddenly too late.

The first step is to establish your goals. Who do you wish to benefit from your estate? Do you want them to have control over the money? What impact will French succession and UK inheritance taxes have? Can you avoid probate on any assets? Should you choose French succession law or UK succession law? Then take specialist advice to put structures in place to achieve your goals – cross border succession planning is complex, particularly for wealthier families and/or those with children from previous relationships. Make sure you get it right.

Savings and investments

Are you certain your investments, and the mix of them, is suitable for your new life in France – for your circumstances, needs, time horizon and risk tolerance? This is such an important element of protecting and growing your wealth, yet many people do not have a strategic investment plan in place, or have neglected one set up years ago.

You first of all should establish your risk appetite, then make sure that the mix of investment assets in your portfolio is in line with it. This will involve a careful blend of asset types, companies, countries, sectors etc, which should also be structured to suit your specific objectives – for example, is income or growth more important for you?

Even if you have a carefully structured portfolio, it is essential to review it every year. As asset prices rise and fall your portfolio could become unbalanced and carry more risk than you previously intended. You may need to make adjustments to re-balance it.

Pensions

Today’s pension landscape is quite different from a few years ago, so spend a little time to establish the best course of action for your pension funds.

The UK’s “pension freedoms” provide you with many ways to access your funds. This creates some attractive opportunities, but great care must be taken to establish the best course of action for you – do not risk your long-term financial security.

If you have a final salary pension you may be able to take advantage of higher transfer values being offered by some providers. While this could provide new opportunities, you should carefully weigh this up against giving up a guaranteed pension for life and take regulated advice to avoid pension scams.

Remember that UK pension benefits (excluding the state pension) totalling over £1 million breach the lifetime allowance and anything over this triggers 55% UK taxation when taken as cash or 25% for income and transfers. Consider ‘protection’ options or transferring to minimise tax penalties.

You need to consider the French tax implications of all your options, but the local tax regime can provide advantages, particularly if you can take all your pension as a cash lump sum at once. In this case you may be able to pay just 7.5% tax, plus 9.1% social charges (2018 rate). You escape social charges if you have not yet registered for healthcare or have Form S1.

Reviewing your wealth management arrangement once a year should prove profitable and provide peace of mind. You should look at all the above areas together, as changes in one could affect the other, and establish holistic solutions that work for your personal situation.

Our France advisers would be happy to review your current tax and wealth management and discuss strategies to improve and protect your wealth for yourself and your heirs.





Article courtesy of Blevins Franks - Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices, which are subject to change. Tax information has been summarised; individuals are advised to seek personalised advice.