tax for non resident purchases of property

[markfrance]

Hello all

My wife and I are looking at buying property in the South of France and living there for up to 6 months per year. I am British, but non tax resident anywhere for the last 10 years since we have been sailing and living in different countries each year, not more than the max to be considered tax resident.

I have an income via offshore sources, but was wondering if the purchase of property and the fact that we would be living there for up to 6 months affect tax situation in any way?.

thanks in advance for any replies.

mark

[giantpanda]

Hi,

see here the conditions , when you are a French Tax resident ( so here you have to take some precautions if you want to avoid having to declare your world income, and the taxes paid in France too):

Impôt sur le revenu : notion de résidence fiscale

Notwithstanding, when you have a house in France, the Tax Office can tax you on a 3 times the effective renting value of your house.


However the above possbility is usually used for people who have very high total estate, and who attempt to avoid paying taxes in France. A last resort, you can not oppose.

A point you will also have to consider, any from housing will be subject to the French succession rules, which are very different from the GB rules.
And a GB will for this will be void. So you need to organise the French succession, to reach or try to reach ( not always possible ) what you really wish. The more children you have, especially from different marriages, the more complicated it gets.

You have to consider this on how you purchase a housing - it can save quite some money, instead of having to adpat later.

Yours,

giantpanda

[Bevdeforges]

Hi and welcome to the forum.

The question of your "tax residence" will probably depend upon where you are the rest of the year. Under the French tax Code (Article 4B, if you're interested) you are deemed to be resident in France for tax purposes if:
- you have your home or main abode in France or
- you carry on a professional activity in France, whether as an employee or not, unless you prove that this activity is carried on in France incidentally or
- your centre of economic interest lies in France.

The terms are deliberately vague, as most countries take the position that you have to be tax resident somewhere. If you are determined to be tax resident in France, then your worldwide income will be subject to French income tax.

The six months or 183 day limit is only a guideline in most countries. I don't think it's written into the law most places. If you have four different homes around the world, you may wind up "tax resident" in the one where you spend the most time, or that you use to receive your bank statements.
Cheers,
Bev

[markfrance]

Thanks for replying so fast...:-)

I do have a house in Australia, and in UK, so the apartment in France would not be my main residence. my business is online, headquartered in USA, and using offshore companies sends invoices for software development services in China. A little bit complicated, but basically I still won't fit into any of the vague sections in the French tax document, so perhaps they may try the 3 x times rental value. I certainly won't be registering personally in France, so perhaps I may come under their radar?..:-)

cheers
mark

[giantpanda]

Hi!

As I wrote the 3 times the rental value is very exceptional - I know in 12 years of only one case,and it was such where the person concerned did everything ( over avocat fiscaliste ) not be be considered as French resident.

NB. Be aware however if you were to work in France, be it only on internet ( one day is enough ) then you would be a French fiscal resident,, and this would imply other items such as Social Security etc.

Yours,

giantpanda

[Bevdeforges]

They could try the 3x rental value thing on you as a "non-resident" - though I'm not entirely sure how that works.

Where you'll come onto their radar is at the close of the purchase of the property. They will need to have some indication of your "primary residence" so they'll know where to send the taxes foncières and taxe d'habitation bills if not to the house you buy. The notaires are responsible for setting up that sort of thing, so my guess is that you'll hit their radar at that point.

Giant Panda's warning about the inheritance laws here is worth considering, too. Any house you own in France is subject to French inheritance laws, no matter what. Consult a good notaire who can explain your options to you. (Or you can take my husband's approach, which is "heck, after I'm dead, I really won't care one way or another, will I?" )
Cheers,
Bev

[markfrance]

Thank you both for the info - I think rather than buying we may do 1 or 2 month rentals in different places - we aren't sure where exactly the best place will be yet, but since we travel a lot in Europe as well this may be the best bet. We would have bought an apartment around Cannes, but used it as a base for travel...we may still do that, but in the current climate I think there won't be too much increase in value over the next 18 months - might as well use the interest on capital to travel...