Taxes in France for people of Independent Means??

Hi,

I am moving to Paris next month on a Long Stay Visiteur Visa. I am an Indian citizen and have passive income from properties I own in India - all my income is PASSIVE and I am not doing any job or business at all. I pay full taxes on my income in India and I believe India-France have a tax treaty in place as well.

I want to know the following -

1) If I live more than 183 days in France per year then on my income of lets say 100,000 euros - will I have to pay a lot in taxes to france if I am already being taxed in India??

2) What if I live in France 6 months a year and the rest in another EU country - would that help me avoid any taxes in France? But then will they renew my long stay visa as long as I keep showing them I have enough money to live in France??

3) What if I invest in 2 properties in Paris for renting them out - then would I be taxed on my worldwide income regardless of my stay period in France? or would I be just taxed on my income in France?

4) Is it true that I will not have to pay any wealth tax as a new arrival in france since I read that new expats are exempt for 5 years from the wealth tax??

5) I will be having private fully comprehensive medical insurance coverage - will I still have to pay social security taxes in France??

6) Lastly, I read somewhere that France has a new Exit tax - which means if I decided to settle in France and lived there 6 years then I would be liable to this exit tax if I wanted to move out of france at some point? Is this true?

If it weren't for the tax headaches I would invest and live in France forever....I love the country and can't get enough of it. I've been spending a lot of time in Paris as a visitor but feel very sad each time I have to leave.....and i've tried living everywhere else in the world but nothing appeals to me more than the french way of life....I just wish I could figure out an easy way around the taxes so I don't end up spending all my money in tax and actually have something to live on.


Merci Beaucoup!!!!

[Bevdeforges]

The idea of taxes is that if you live in a country, you should be contributing to it. But enough for that lecture. Precisely how and how much you're taxed in France depends on a number of factors.

1) Living more than 183 days a year in France gives you the "presumption" of residency and thus the need to file an income tax declaration. For the types of income where you are already being taxed in India, there is tax relief - basically, you declare the income and then detail what it is and where it comes from on a separate form for "foreign income." You're generally granted either a tax credit or an exoneration of taxation on the income, depending on the provisions of the tax treaty and the type of income involved.

2) Your long stay visa give you the right to reside in France. If you split your time between France and another EU country, chances are you'll be in the other country under the Schengen or other mobility agreement and not considered resident there. It's where you're resident that counts - and that doesn't necessarily mean 183 days physically there. There are several other factors to be taken into account.

3) If you invest in income producing property in France, it again comes down to your residence. If you're resident in France, then your worldwide income will be subject to French income taxes. If you're resident elsewhere, then only your French income will be taxed by the French.

4) Parsnips is the expert on that aspect of the wealth tax and should be along shortly to confirm what the situation on that is. The wealth tax threshold is being raised, in any event.

5) Depends on your sources of income. Normally you only pay "cotisations" (social insurances) on salaries and other "earned" income.

6) The exit tax has been around for a while now. It's meant to discourage folks from setting up and running a successful business here and then transfering the lot to Belgium (or any place else without a wealth tax) before selling it or otherwise cashing in on the increase in value. As I understand it, it depends on your holdings and your precise status at the time of your departure. IIRC, if you don't sell off your holdings after expatriating them from France, you can get part or all of the tax back after a few years. Again, parsnips may have a few more details on this.

France is a country where the "rich" (however defined) are taxed pretty heavily in the name of "solidarity." One thing to remember, though, is that you already pay plenty of taxes in the form of VAT and that constitutes a larger proportion of the government's income than income taxes anyhow.
Cheers,
Bev

Thanks a lot Bev,

When you say France is a country where the rich are taxed quite heavily - but then if rich people live in france only 183 days a year then they are not taxed at all??

Well also - do you think the rich are taxed all that much in France or is it more just Hype??? If you are aware - taxes in certain cities in the US are much higher - for example - New York city has a state., federal and city tax and housing taxes in the US are ridiculous (almost 2-3% of the house value) if a house is valued at $500,000, then yearly tax payable can be as high as $15,000 in many states. Just because income taxes are lower in the US doesn't mean its a low taxed country.

Well my main concern is the wealth tax - as I will fall in the higher bracket but I have a lot of assets and not as much income, thats why I feel the wealth tax is an unfair tax. If they abolish the wealth tax then I have no problem living in France forever and investing there as well as becoming a French citizen...I would really like to.

[Bevdeforges]

The rich certainly complain plenty about the "high taxes" in France. Overall, I think we're all taxed more in France than in the US. But, at least we get something in return for what we pay - health care, retirement, child allocation (for those who have kids), genuine regulation of critical markets (food, banks to some extent, nuclear energy, etc.).

It remains to be seen how things turn out over the summer, but apparently they are NOT going to eliminate the "bouclier fiscal" - which is a sort of ceiling on the wealth tax (the ISF, as it's known here) so that your total income and wealth tax can't take up more than 1/2 your income.

Overall Americans pay far less in taxes than we do here in France - except if you add in all the stuff the Americans have to pay for themselves (in the "free market") that are considered obligations of the government here: health care and health insurance, setting up and managing a retirement savings account, maintaining a "rainy day" savings account to cover job loss or serious illness or injury, etc. etc.

In France there are two forms of property tax on homes: one for the owner and one for the resident. If you own your own home, you pay twice.

Basically, no one likes paying taxes but most folks seem to like getting services from their government.
Cheers,
Bev

Do u think taxes in France are overall much higher than even UK???

[Bevdeforges]

Originally Posted by Moving2France

Do u think taxes in France are overall much higher than even UK???

Never paid taxes in the UK, so it's hard to say.
Cheers,
Bev

[parsnips]

Originally Posted by Moving2France

Hi,

I am moving to Paris next month on a Long Stay Visiteur Visa. I am an Indian citizen and have passive income from properties I own in India - all my income is PASSIVE and I am not doing any job or business at all. I pay full taxes on my income in India and I believe India-France have a tax treaty in place as well.

I want to know the following -

1) If I live more than 183 days in France per year then on my income of lets say 100,000 euros - will I have to pay a lot in taxes to france if I am already being taxed in India??

2) What if I live in France 6 months a year and the rest in another EU country - would that help me avoid any taxes in France? But then will they renew my long stay visa as long as I keep showing them I have enough money to live in France??

3) What if I invest in 2 properties in Paris for renting them out - then would I be taxed on my worldwide income regardless of my stay period in France? or would I be just taxed on my income in France?

4) Is it true that I will not have to pay any wealth tax as a new arrival in france since I read that new expats are exempt for 5 years from the wealth tax??

5) I will be having private fully comprehensive medical insurance coverage - will I still have to pay social security taxes in France??

6) Lastly, I read somewhere that France has a new Exit tax - which means if I decided to settle in France and lived there 6 years then I would be liable to this exit tax if I wanted to move out of france at some point? Is this true?

If it weren't for the tax headaches I would invest and live in France forever....I love the country and can't get enough of it. I've been spending a lot of time in Paris as a visitor but feel very sad each time I have to leave.....and i've tried living everywhere else in the world but nothing appeals to me more than the french way of life....I just wish I could figure out an easy way around the taxes so I don't end up spending all my money in tax and actually have something to live on.


Merci Beaucoup!!!!

Hi,
Here's some answers ,as I understand the situation.

1. Your rents from indian sited properties are ,under article 10 . of the France /Inde double Tax Treaty taxable ONLY in India. You should declare them in France but they are only used to calculate the tax rate on any french- taxable income .The 183 day rule is a bit of a myth-it is only one criteria for establishing residence . I don't think you are going to pay massive amounts of french tax (depending on how much income you receive from FRENCH based assets).

2. At the moment , individuals transferring their fiscal domicile into France are subject to the Wealth Tax on their french based assets only, for 5 years; so you might find it useful to become resident elsewhere after that period . Whether you could subsequently return to another 5 year period of derogation is a subject for a tax specialist which you could pursue once in France.

3.As far as I can see the proposed exit tax (still going through parliament) is aimed at french nationals owning large amounts of shares in french companies (especially family businesses) with latent capital gains which the french want to tax before they become non-resident in a no-CGT jurisdiction.

4. French buy- to- let properties would of course be taxed in France (only) , the rest of your rents -from India would be as in 1. above. Rental income is fairly lightly taxed in France.

5.With full private health cover you would not have to make contributions to the french health system but , on any french-taxable income (rents etc.) you would be charged 12.3% "Contributions Sociales" which despite their name are, in fact, just another tax , which actually collects far more than the income tax.

I hope this gives you some ideas, but I urge you not to make any important moves on my unsupported word --confirm everything with a tax consultant or with the french tax authorities ( you could use a copy of this answer as a basis for discussion).

Originally Posted by parsnips

Hi,
Here's some answers ,as I understand the situation.

1. Your rents from indian sited properties are ,under article 10 . of the France /Inde double Tax Treaty taxable ONLY in India. You should declare them in France but they are only used to calculate the tax rate on any french- taxable income .The 183 day rule is a bit of a myth-it is only one criteria for establishing residence . I don't think you are going to pay massive amounts of french tax (depending on how much income you receive from FRENCH based assets).

2. At the moment , individuals transferring their fiscal domicile into France are subject to the Wealth Tax on their french based assets only, for 5 years; so you might find it useful to become resident elsewhere after that period . Whether you could subsequently return to another 5 year period of derogation is a subject for a tax specialist which you could pursue once in France.

3.As far as I can see the proposed exit tax (still going through parliament) is aimed at french nationals owning large amounts of shares in french companies (especially family businesses) with latent capital gains which the french want to tax before they become non-resident in a no-CGT jurisdiction.

4. French buy- to- let properties would of course be taxed in France (only) , the rest of your rents -from India would be as in 1. above. Rental income is fairly lightly taxed in France.

5.With full private health cover you would not have to make contributions to the french health system but , on any french-taxable income (rents etc.) you would be charged 12.3% "Contributions Sociales" which despite their name are, in fact, just another tax , which actually collects far more than the income tax.

I hope this gives you some ideas, but I urge you not to make any important moves on my unsupported word --confirm everything with a tax consultant or with the french tax authorities ( you could use a copy of this answer as a basis for discussion).

Thanks a lot for your advice. Well my plan is to move to Paris and hold my assets between India and France. I plan to invest at least 1 million euros in France within a year and I will invest this mostly in real estate. I would like to buy 2-3 small studio apartments with cash and put down another 100-200k and buying a large apartment for myself to live in.

MY main concern is long term - as I will have assets in excess of 5 million euros in India but mostly non-income producing family homes, etc. If I took up french citizenship at that point then will it be a big headache??? Is it worth it under my circumstances to even move to france or should I simply look for a more tax friendly country? My other option would be Italy in that case but I can't stand the government in Italy...if the french don't ruin me with their taxes the Italians would ruin me with bribes and corruption...lol.

I want to live in france but I don't want to live like a poor person in france...and I really have a lot of assets but not enough income to pay the wealth tax in france...also paying 50% of my income sounds too much anyway. In India I am only taxed at a highest bracket of 35% currently. I just want to invest in France so I have diversified my assets a bit and would create some security for myself in France in case my investments in India went bad.

Thanks for all your help, really appreciate it.

[parsnips]

Originally Posted by Moving2France

Thanks a lot for your advice. Well my plan is to move to Paris and hold my assets between India and France. I plan to invest at least 1 million euros in France within a year and I will invest this mostly in real estate. I would like to buy 2-3 small studio apartments with cash and put down another 100-200k and buying a large apartment for myself to live in.

MY main concern is long term - as I will have assets in excess of 5 million euros in India but mostly non-income producing family homes, etc. If I took up french citizenship at that point then will it be a big headache??? Is it worth it under my circumstances to even move to france or should I simply look for a more tax friendly country? My other option would be Italy in that case but I can't stand the government in Italy...if the french don't ruin me with their taxes the Italians would ruin me with bribes and corruption...lol.

I want to live in france but I don't want to live like a poor person in france...and I really have a lot of assets but not enough income to pay the wealth tax in france...also paying 50% of my income sounds too much anyway. In India I am only taxed at a highest bracket of 35% currently. I just want to invest in France so I have diversified my assets a bit and would create some security for myself in France in case my investments in India went bad.

Thanks for all your help, really appreciate it.

Hi,
I think you have an exagerated view of the Wealth tax - if you look at this link:
Le barème 2011 et le calcul de l'ISF
You will see for example that a person with liable assets worth between 2 570 000 € and 4 040 000 € would pay-( assets x 1%) - 13 445€ , so for 3 000 000€ that would be 16 555€.
For the 1 000 000€ you intend to invest in France (only this being liable first 5 years)wealth tax would be 1100€. Your rent based income from India remains free of income tax in France as long as the current treaty is in force.

As to taking french citizenship , that is a long and complex process, and I don't think you would gain ,or indeed , lose much by it. It might make it more difficult to move domicile out of France in future (possible exit tax). I'm not an expert on this aspect , you need to talk to a french lawyer.

[parsnips]

Hi,
Regarding the 5 year derogation of wealth tax on non-french assets, this is renewable after each 3 year spell of non-french residence (according to PFK accountants).