Financial Planning for British Expats in France

France operates a residence-based tax system, taxing French tax residents on their worldwide income at progressive rates reaching 45%. On top of income tax, social charges (prélèvements sociaux) of 17.2% apply to investment income and rental income for most French tax residents, a layer of taxation that many expats underestimate when first arriving.

Investment income such as dividends, interest and capital gains is generally taxed under the prélèvement forfaitaire unique (PFU), often called the flat tax, at a combined rate of 30%. That figure is made up of 12.8% income tax and the 17.2% social charges. French residents can instead opt to have this income taxed at the progressive income tax rates where that produces a lower result, an election that has to be weighed case by case.

Assurance-vie is a French life-assurance investment wrapper that residents commonly use for longer-term saving and succession planning. Gains inside the wrapper are not taxed year by year; they are only taxed when money is withdrawn. Once a policy has been held for eight years, an annual allowance (abattement) applies to the gains element of any withdrawal: 4,600 EUR for an individual and 9,200 EUR for a couple. Assurance-vie also sits outside the normal succession rules within set limits, with particularly favourable treatment for premiums paid before age 70. Whether it fits an individual is a question a regulated specialist reviews.

A UK ISA is worth understanding before you move. An ISA is only tax-free under UK rules, so once you become French tax-resident France does not recognise its protected status, and the income and gains inside it generally become taxable in France like any other holding. France has its own domestic tax-advantaged equity wrapper, the Plan d'Epargne en Actions (PEA), which allows investment in qualifying shares and funds with reduced tax on gains after a minimum holding period. How a UK ISA is treated, and whether a French wrapper is relevant, are areas a regulated specialist reviews.

France also levies a wealth tax on real estate, the impôt sur la fortune immobilière (IFI). It applies to households whose net taxable property assets exceed 1.3 million EUR on 1 January, and is charged on a progressive scale once that threshold is crossed. The IFI is concerned with real estate wealth specifically rather than total net worth, which is a common point of confusion for new arrivals.

French succession law differs sharply from the freedom of testamentary disposition familiar in the UK. Under the réserve héréditaire (forced heirship), a protected share of an estate is reserved for the deceased's children regardless of what the will says. The reserved share is one half of the estate where there is one child, two thirds where there are two children, and three quarters where there are three or more children; only the remainder, the quotité disponible, can be left freely. The EU Succession Regulation 650/2012 (Brussels IV) allows a person to elect the law of their nationality to govern their succession, an option a regulated specialist and a French notaire can advise on.

Succession tax (droits de succession) is separate from succession law and works differently from UK inheritance tax. It is charged on each beneficiary according to their relationship to the deceased rather than on the estate as a whole. A surviving spouse or PACS partner is exempt. Each child receives an allowance (abattement) of 100,000 EUR before tax applies on a progressive scale, while distant relatives and unrelated beneficiaries face much higher rates and far smaller allowances. UK inheritance tax, by contrast, is calculated on the estate itself. How the two systems interact for a family is an area a regulated specialist reviews.

Two further structures often arise. The Société Civile Immobilière (SCI) is a French property-holding company that families commonly use to own and pass on real estate. Separately, France imposes strict trust reporting obligations: trustees, settlors and beneficiaries connected to France can be required to declare trust assets and report changes, with significant penalties for non-compliance. Both are areas a regulated specialist reviews.

The UK and France have a double taxation treaty that determines which country has taxing rights over particular types of income, such as pensions, rental income and government-service pay, and that provides mechanisms to relieve double taxation. Since Brexit, UK nationals are third-country nationals in France and generally need a titre de séjour (residence permit) to live there, with the route depending on personal circumstances and length of stay.

Access to the French health system is another early consideration. UK state pensioners and certain others may be covered by a UK-issued S1 form, which gives access to French healthcare with the UK meeting the cost, while many other residents access cover through PUMA (Protection Universelle Maladie) once settled and contributing. Most residents also take out a complementary policy (mutuelle) to cover the portion the state system does not reimburse.

From forced heirship and succession tax charged per beneficiary to social charges on investment income and the question of which wrappers keep their advantages once you are resident, France is a country where the details decide the outcome, and these are precisely the areas a regulated specialist reviews with you.