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The tax and legal systems in France

By Spectrum IFA - Topics: France, Investments, Tax Efficient Savings, Tax in France, wealth management
This article is published on: 23rd July 2021

23.07.21

There are lots of reasons to love France …
… but the legal and tax systems aren’t high on that list!

How to manage wealth effectively, whilst minimizing administration, requires an experienced adviser with access to solutions purposefully built for the French marketplace, with due regard for t he local taxation and legal systems.

Because knowledge allows us to make better decisions, we invite you to watch the recent webinar with Quilter International.

The webinar considers financial planning options designed to help you keep more of your wealth for longer, ever mindful of the crossover with other countries, such as the UK.

As one of the leading providers of wealth management solutions, Quilter International works primarily with expatriates in around 40 countries, including France. Their speaker, David Denton, is a Fellow of the Personal Finance Society and Trust and Estate Practitioner, and has spent almost three decades in wealth management, training professional and lay audiences world-wide, on the subject of wealth preservation.

    The Spectrum IFA Group is committed to building long term client relationships. This form collects your name and contact details so we can contact you about this specific enquiry. For further information, please see our Privacy Policy.

    The Celtic Golf Society – Brittany

    By Michael Doyle - Topics: France
    This article is published on: 18th June 2021

    18.06.21

    The Celtic Golf Society
    Domaine des Ormes, Brittany
    Friday 11 June

    Michael Doyle of The Spectrum IFA Group sponsored today’s event.

    The Celtic Golf Society has been running for a few years now in and around Brittany. When Michael moved to Brittany back in 2015 he became an active member of the society, helping increase the number of participants.

    The society is not a club, so there are no membership fees and it’s organised on a pay as you play basis.

    Today’s event was attended by 27 competitors (both male and female) and another 8 partners who joined for lunch afterwards, with index ranging from 3 to 36. The atmosphere was fantastic and everyone welcomed the fact that we could have a meal together after the friendly round of golf.

    Michael Doyle made sure there was a prize for everyone who attended.

    If you’d like to join us for a round of golf at some point, then please feel free to drop Michael an email and he’ll put you on the email distribution list: michael.doyle@spectrum-ifa.com

    Further, if there’s anything he can help you with by way of financial planning he’d be more than happy to have an initial informal chat with you about your situation.

    The Celtic Golf Society
    The Celtic Golf Society

    French Tax declarations in June – Trusts & Wealth Tax

    By Katriona Murray-Platon - Topics: France, tax advice, Tax Declarations, Tax in France, Wealth Tax
    This article is published on: 1st June 2021

    01.06.21

    Oh what a month of May! So despite the old adage of being able to do as we please, the weather clearly didn’t get the memo! May has been a whirlwind of enquiries and questions on taxes with lots of people requesting the Spectrum Tax Guide. Hopefully, by now most of you have filed your tax returns, but those living in department numbers 55 to 976 as at 1st January, still have a few more days, until 8th June to file theirs. Also, if you have appointed an accountant to do your tax return, they have a special extended deadline until the end of June to file all remaining returns.

    If you had a go at your own tax return, but would prefer to hand it over to a professional either for future returns or to check that what you filed this year was correct, it would be best to try to contact them after the end of June. If you think you made a mistake on your tax return, you have until the end of the year to correct it. You will soon know if there is something not quite right with what you have declared when you receive your statement at the end of August/beginning of September. At that point, if you are quick you can submit an amended return before the payment deadline; otherwise you may have to pay the tax payable on the original statement whilst awaiting the amended return to be processed and a new tax statement to be issued, with any tax reductions if applicable.

    French Tax declarations

    This month, my family and I set off for our first mini-break since the lockdown in March last year. I have to say we were a bit nervous venturing out of our house, preparing the suitcases and worrying that we hadn’t forgotten anything. We stayed in the lovely village of Coux-et-Bigaroque, about 45 minutes east of Bergerac. In spite of the weather we were able to take the children to the Perigord Aquarium, the Caves of Grand Roc and the Chateau of Milande, formerly owned by the singer and entertainer Josephine Baker. Whilst I love visiting this chateau and the birds of prey show in the grounds, it always makes me feel a bit sad. It is an example of how someone with such talent and a kind heart didn’t have the right advisers to help her make the best financial decisions.

    Tax Calendar

    In June there is another tax deadline that still needs to be considered:

    Which is that all Trust declarations need to be declared by 15th June. I wrote an article many years ago which you can find HERE

    There have been no significant changes to the treatment of trusts since the law of wealth tax was amended to include only immovable property. A trust can be recognised in France and perfectly valid in France provided that it doesn’t go against public policy (ordre public) and in particular the rights of heirs under French law. Income from a trust is subject to income tax depending on the nature of the income (rent from an apartment or capital income) and can be subject to tax credits under a double tax convention. Trusts (excluding charity trusts and pension trusts) must be declared in France if any of the settlor, trustee or beneficiary are French residents or if the trust contains an asset situated in France on 1st January. According to a press release by the Ministry of Finance on 5 July 2016, 16,000 entities had been identified and notified as trusts to the French administration.

    Another change this year is that the Wealth Tax declaration which normally had to be submitted by middle of June if you have assets over a value of €1,3million, this year has to be submitted at the same time as your tax returns by way of a tax form called 2042-IFI. Those of you resident in departments numbered 55 and above still have until 8th June to submit. If you French tax residents who came to live in France, after having spent 5 years abroad, you are not taxable on your non-French assets until 5 years after you became resident. Non-residents also have to declare if their French assets are over €1.3million.

    Finally, 30th June 2021 is the deadline for Brits who were resident in France before 31st December 2020 to apply for their residency permit under the Withdrawal Agreement. If you haven’t already done so or know of someone who hasn’t, and they were resident before 31st December 2020, please do try and encourage them to go to the following website:

    Inheritance Planning and French Residency

    By Occitanie - Topics: France, Inheritance Tax, Succession Planning
    This article is published on: 18th May 2021

    18.05.21

    Welcome to the latest edition of our newsletter ‘Spectrum in Occitanie, Finance in Focus’, brought to you by your Occitanie team of advisers Sue Regan, Philip Oxley, Derek Winsland, together with Rob Hesketh now consulting from the UK.

    As a very important part of any financial planning review, we thought we would re-visit the subject of inheritance planning in this newsletter for the benefit of newcomers and as a reminder for those of you who are already settled in this fabulously diverse and beautiful region of France.

    Despite the importance of making sure one’s affairs are in order for the inevitability of one’s demise, very few actively seek advice in this area and, as a result, are unaware of the potential difficulties ahead for their families and heirs, not to mention potential tax bills which can be quite substantial for certain classes of beneficiary.

    The basic rule is, if you are resident in France, you are considered also to be domiciled in France for inheritance purposes and your worldwide estate becomes taxable in France, where the tax rates depend upon the relationship to your beneficiaries.

    Fortunately, there is no inheritance tax between spouses, PACSed or civil partners, and the allowance between a parent and a child is reasonably generous, currently €100,000 per child, per parent. For anything left to other beneficiaries, the allowances are considerably less. In particular, for stepchildren and non-related beneficiaries, the allowance is a measly €1,594 and the tax rate on anything above that is an eye-watering 60%!

    There are strict rules on succession and children are considered to be ‘protected heirs’ and, as such, are entitled to inherit a proportion of each of their parents’ estates. For example, if you have one child, the proportion is half; two children, one-third each; and if you have three or more children, then three-quarters of your estate must be divided equally between them.

    You are free to pass on the rest of your estate (the disposable part) to whoever you wish through a French will and, in the absence of making a will, if you have a surviving spouse he/she would be entitled to 25% of your estate.

    You may also be considered domiciled in your ‘home’ country and if so, this could cause some confusion, since your home country may also have the right to charge succession taxes on your death. However, France has a number of Double Taxation Treaties (DTT) with other countries covering inheritance. In such a case, the DTT will set out the rules that apply (basically, which country has the right to tax what assets).

    For example, the 1963 DTT between France and the UK specifies that the deceased’s total estate will be devolved and taxed in accordance with the person’s place of residence at the time of death, with the exception of any property assets that are sited in the other country. By the way, the UK–France Treaty is not affected by Brexit.

    Therefore, for a UK national who is resident in France, who has retained a property in the UK (and does not own any other property outside of France), the situation would be that:

    • any French property, plus his/her total financial assets, would be taxed in accordance with French law; and
    • the UK property would be taxed in accordance with UK law, although in theory, the French notaire can take this asset into account when considering the fair distribution of all other assets to any protected heirs (i.e. children).

    If a DTT covering inheritance does not exist between France and the other country with which the French resident person has an interest, this could result in double taxation if the ‘home’ country also has the right to tax the person’s estate.

    Hence, when people become French resident, there are usually two issues:

    • how to protect the survivor; and
    • how to mitigate the potential French inheritance taxes for other beneficiaries
    Succession tax in Spain

    European Succession Regulation No. 650/2012
    Many of you will no doubt have heard about the EU Succession Regulations that came into effect in 2015 whereby the default situation is that it is the law of your place of habitual residence that applies to your estates. However, you can elect for the inheritance law of your country of nationality to apply to your estate by specifying this in a French will. This is effectively one way of getting around the issue of protected heirs for some expats living in France.

    There are a number of other ways in which you can arrange your affairs to protect the survivor, depending on your individual circumstances, such as a change to your marriage regime (yes, France matrimonial law provides for couples to select a particular type of contract under which their assets will be devolved on divorce or death) and we would always recommend that you discuss succession planning in detail with a notaire experienced in these matters.

    Mitigation of Inheritance Tax
    On whichever planning you decide, it is important to remember that the French inheritance tax rules will still apply. So, even though you have the freedom to decide who inherits your estate, this will not reduce the potential inheritance tax liability on your beneficiaries, which, as mentioned above, could potentially be very high for a stepchild. Hence, there may still be a need to shelter financial assets from French inheritance taxes.

    By far and away the most popular vehicle in France for sheltering your hard-earned savings from inheritance tax is the assurance vie. The assurance vie is considered to be outside of your estate for tax purposes and comes with its own inheritance allowances, in addition to the standard aIllowance for other assets. If you invest in an assurance vie before the age of 70 you can name as many beneficiaires as you like, regardless of whether they are family or not, and each beneficiary can inherit up to €152,500, tax-free. The rate of tax on the next €700,000 is limited to 20% – potentially making a huge saving for distant relatives or stepchildren.

    The more beneficiaries nominated (e.g. grandchildren, siblings, etc) the greater the potential inheritance tax saving, depending on the value of the policy at the time of death. Beneficiaries can be changed or added at any time during the life of the assurance vie. Remember also, that beneficiary nominations are not restricted to family members, so, whoever you nominate gets the same allowance.

    The inheritance allowance on premiums paid to assurance vie after age 70 are less attractive, at €30,500 of the premium (capital investment) paid plus the growth on the capital shared between all named beneficiaries, and the remaining capital invested is taxed in accordance with the standard inheritance tax bands. Nevertheless, an assurance vie is still a worthwhile investment after the age of 70 as, in addition to the inheritance tax benefits, assurance vie offers personal tax efficiencies to the investor such as gross roll-up of income and gains whilst funds remain in the policy and an annual income tax allowance of €4,600 for an individual, or €9,200 for a couple, after 8 years.

    So, in order to ensure that your inheritance wishes are carried out some planning may be required and there are investment opportunities to mitigate the inheritance tax for your chosen beneficiaries. Please contact us if you would like to discuss your particular circumstances.

    Spanish Inheritance Tax

    Inheriting From a Non-French Resident
    The tax position of a French resident beneficiary inheriting from the estate of a non-French resident is worthy of a more detailed explanation.

    The good news for UK nationals is that, due to the aforementioned DTT on inheritance between France and the UK and providing the deceased did not have any assets situated in France at the time of death, then there is no French inheritance tax payable if you are resident in France.

    Where there is no specific tax treaty on inheritance in place between France and the country of residence of the deceased, then the obligation to pay French inheritance tax is determined by how long you have been fiscally domiciled in France at the time of death. You are considered domiciled fiscally in France if you are resident in France and have been for at least six years out of the last ten years preceding the death. If you fall within scope for inheritance tax then the allowance and tax rate will be in accordance with your relationship to the deceased.

    If you have received an inheritance, then you may well need some advice on what to do with it and how best to shelter it from both personal taxes for you and inheritance taxes for your beneficiaries. We can help you with that.

    Pension Funds and Inheritance Tax
    Death benefits from bona fide pension schemes are excluded from your estate for inheritance purposes and are therefore not subject to French inheritance tax. Generally speaking, it is possible to leave your pension fund to the beneficiary of your choice, although some defined benefit (final salary) schemes will only pay death benefits to certain beneficiaries.

    It is important to bear in mind that if you are considering encashing your whole pension pot under ‘Pensions Freedom’, once the funds are removed from the pension wrapper, they will be included in your estate for inheritance purposes. You could subsequently shelter these funds in an assurance vie but we strongly recommend you seek our advice before fully cashing in your pension funds as there may be any number of reasons why this would not be in your best interests.

    Tax in France – what needs to be declared

    By Katriona Murray-Platon - Topics: France, French Tax Changes, tax advice, Tax in France
    This article is published on: 6th May 2021

    06.05.21

    No-one needs reminding that 2020 was a year like no other. Our lives were changed in many ways and this had an effect on our finances. Luckily there were many government schemes and initiatives to help people overcome the financial difficulties suffered in lockdown and because of the health restrictions. However now that 2021 tax season is upon us, what now needs to be declared?

    Salaried workers bonus is tax exempt
    Last year some salaried workers may have received a consumer bonus which is exempt from tax up to €1000 (or €2000 if there is an interest agreement/“accord d’intéressement”) Public workers and health workers also received a bonus which is exempt up to €1500.

    Overtime hours are usually exempt up to €5000 per year, however the exemption threshold has been increased to €7500 for those hours carried out between the beginning of lockdown (16th March 2020) and the last day of the emergency health state set at 10th July 2020. This applies to salaried workers in the public and private sector as well as those under special regimes. All exempt overtime must still be declared on the tax form and will be included in the tax income reference rate for the tax household.

    The Ministry for Economy and Public Accounts has announced that the payments paid by companies to their employees to cover the costs of working from home are exempt from tax up to €2.50 per day worked at home and up to €50 per month for 20 days and €550 per year.

    Salaried workers who choose to deduct their actual costs rather than applying the flat 10% abatement on their salaries, can still choose this options without supplying supporting documents however these deductions may not be so beneficial depending on your level of salary. As always it is best looking at both options and seeing which works best for you.

    tax deductions

    Charitable gifts in 2020
    Although things were hard for many people last year, it was also a year, more than ever to help those less fortunate. Gifts given in 2020 to humanitarian organisations and victims of domestic violence result

    in a tax credit of 75% of the amounts donated up to a maximum threshold of donations of €1000. Over this threshold and for donations given to other organisations (including political parties), the rules haven’t changed, the tax reduction is 66% for such donations and he maximum threshold is 20% of the taxable income. The excess can be carried over over the next 5 years and results in a tax reduction under the same conditions.

    Independent workers
    Companies and individual tradespeople benefitted a lot from the government help last year. Fortunately the financial help granted by the solidarity fund to companies most affected by the health crisis, the exceptional financial help to independents (CPSTI RCI COVID 19) and those paid by the additional pension schemes of independent professionals and lawyers (CNAVPL and CNBF) are all exempt from income tax. The other help from public or private entities are taxable if there is no specific legal provision that exempting them otherwise.

    Auto-entrepreneurs and micro-entrepreneurs who were exempt from paying part of their social charges must include in their tax declaration the turnover figure that was not declared to URSSAF because of this exemption.

    Home help tax credit – changes to the conditions
    The home help services normally give rise to a tax credit of 50% of the amount paid out. These expenses are deductible up to €12,000 (plus €1500 per dependent and person over 65 years, up to a maximum of €15,000). However in 2020, during lockdown some of these services had to be temporarily suspended or even cancelled, or in certain circumstances could be carried out online.

    If you employed someone carry out a service in your home, you may have benefitted from the partial compensation for the hours that your employee was unable to carry out during lockdown. These compensated hours cannot benefit from the normal tax credit and if you nonetheless paid your employee their salary even though they couldn’t actually work, this cannot be used for the tax credit (it is classified as a solidarity donation).

    Exceptionally, some services, which in principle took place in the home, but were in fact carried out remotely because of the health crisis, still give rise to the tax credit under the same conditions as other home help services. These include online additional schooling support lessons and individual lessons (gym, music etc) given to adults or children. The Ministry of Economy and Finance has specified that these services “must have involved a minimum amount of effective interaction, implying a physical presence of the person supplying the service at one end of the screen/telephone line and the be specifically given to the person paying for the service at home”. This therefore does not include online group lessons or watching pre-recorded videos online. This derogation applies throughout the time that people were not allowed to go out either because of lockdown or curfew.

    property rental income

    Professional landlords who waived rent
    If you are a professional landlord and you waived the rent of your tenants for a commercial or professional premises rented to a company that was difficulty because of the Covid crisis, you can still deduct your

    expenses (ownership expenses and mortgage interest). You also can carry forward your rental loss, up to €10,700, on your overall income. The additional loss – and the part of the deficit arising from the mortgage interest – will be carried forward and deducted from your income over the following 10 years.

    There is also a specific tax credit if you definitively waived rent for November 2020 only (not any of the other months in 2020). The tenant company must have employed at least 5000 employees and have been closed to the public (even if they were able to do click and collect) or to have carried out its business in one of the sectors of business that were eligible for the solidarity fund as listed in Decree no 202-371 of 30.03.2020 (hotels, travel industry for example).

    Furthermore the tenant company must not have been in financial difficulty on 31st December 2019 or have been under court ordered administration proceedings as at 1st March 2020. The tax credit is equal to half of the unpaid rent if the company employed less than 250 employees. If the number of employees was between 250 and 5000, the 50% is calculated on the two thirds of the rent. If the tenant company is managed by an ascendent, descendant or member of your tax household, you must justify the cash flow problems in order to deduct your expenses and get the tax credit.

    Voluntary retirement contributions
    You can deduct from your total income the sums paid into a retirement scheme such as PER, PERP or Préfon up to the normal deduction limits. If you have opened a PER for your child (whether a minor or of age but still within your tax household) you can deduct the payments even if they payments were paid by your own parents (the child’s grandparents) Children have their own deduction amounts even though it is not necessarily stated on the tax return.

    Are you a French tax resident who owns a house in the UK?

    By Andrea Glover - Topics: France, Tax in France, UK property
    This article is published on: 4th May 2021

    04.05.21

    UK Property Matters

    I thought I would write this month about the topic I am asked most frequently about at the moment by clients and prospective clients, which is the subject of owning property in the UK as a French tax resident. 

    There are many reasons for deciding to keep properties in the UK when moving to France. Whether it be a ‘bolt hole’ to go back to for those that frequently return to the UK for family or work, or as an investment to generate rental income to supplement retirement. 

    There are several potential French and UK tax consequences to consider, when owning property in the UK, which I will cover in general terms by each specific tax area.

    UK Property Tax

    Wealth Tax

    Wealth tax in France is called Impôt sur la Fortune Immobilière (IFI). The assets that are taxable under IFI are all worldwide real estate and investments in real estate which includes, amongst others, the main home as well as second homes. Business property assets are exempted subject to certain conditions.

    The tax is triggered by eligible net property wealth of more than €1.3 million. For UK expatriates living in France, foreign assets are exempt from wealth tax for the first 5 years.

    Capital Gains Tax (CGT)

    As a French tax resident selling property in the UK, you are liable to CGT both in the UK and in France.

    Since 2015, the UK has applied CGT on the sale of property of former residents noting that private residence relief, if applicable, is available for the final 9 months of ownership. It is only the gain from April 2015 that is taxable and the normal tax free allowance (currently £12,570) also applies.

    French CGT and social charges are applicable in France on the sale of a UK property and are based on duration of ownership. Some exemptions do apply, for example when the property was the principal residence in the previous 12 months, although certain conditions apply.

    Under the UK/France double tax treaty, UK expatriates can receive a credit in France for any UK CGT paid on the sale of the UK property, but they cannot offset any UK CGT paid against a social charge payment.

    UK property rental income

    UK Property Rental Income

    Rental income from a UK property, when resident in France, still requires the completion of a UK tax return.

    As a result of the UK/France double tax treaty, income tax and social charges are not payable in France. However, it is important to note that this income is still declarable in France and is taken into account when establishing the tax bands applicable for all other declarable income.

    Inheritance Tax on a Property Held in the UK

    The subject of French inheritance tax is a complex subject that could justify an article in its own right, but in general terms, under the UK/French Double Tax Treaty on inheritance tax, the UK property would fall under UK inheritance rules and applicable taxes.

    In summary, owning property in the UK has potential tax consequences in both the UK and France and as with all such matters, I would recommend that you seek the advice of a suitable expert in all circumstances.

    French Tax Returns 2021

    By Katriona Murray-Platon - Topics: France, Tax in France
    This article is published on: 3rd May 2021

    03.05.21

    The right to make mistakes

    There is an expression in France which goes “In May, do what pleases you” (en mai fait ce qui te plait). This refers to the fact that any frosty weather will have gone by the end of April and you can go out and enjoy the warm weather. However, there is something very important that needs to be done before we can go out and enjoy ourselves and that’s the tax return. Although the tax return is available online in early April, personally I’m not psychologically ready to deal with my tax return until May and then not even that much! As a former tax adviser I used to do around 200-300 returns for clients between March and June, but I have to admit that doing my own tax return is quite a task and requires preparation. It’s a bit like deciding to do a full Sunday roast; you need to make sure you have all the ingredients because you don’t want to get the meat in the oven and discover that you’ve not bought the gravy!

    French Tax Changes 2019

    If you think French tax is daunting, you’re not alone. The French themselves find their tax returns difficult and the French authorities know that it isn’t easy. Moves have been made in recent years to simplify the system with information being automatically declared by employers and banks so that it appears in the tax return, but there is still information that needs to be checked and other information (like expenses or tax credits) that must be included to calculate the tax correctly.

    The preferred method of declaration is online, or even through an app on your smartphone or tablet. However, whilst the French authorities would prefer an online declaration, if this is your first year declaring or you really can’t do it online, you can submit a paper return.

    Tax Calendar

    The deadline for a paper French Tax Returns 2021 declaration is 20th May this year whereas the online deadlines are:

    • 26th May for departments 1 to 19 and for non-residents
    • 1st June for department 20 to 54
    • 8th June for departments 55 to 976

    These dates relate to the place where you were resident on 1st January 2021.

    Even though the French tax authorities are trying to make the system simpler, even introducing an “automatic declaration” this year for those 12 million French tax payers with income and expenses already known to the authorities, the Finance Minister knows that people still make mistakes. The most common of which is failing to declare a child who is in college, lycee or university. Another is that if you opted for the marginal rate on your interest and dividends before, the option is carried over and the box 2OP already ticked on the declaration but an alert message will appear if this regime is not the most favourable. The ten most common errors can be found on the website oups.gouv.fr. Costs for childcare for children under 6 years old, confusion over who includes the child when the parents are separated or divorced and tax deductions for charitable gifts are among the most frequent mistakes.

    Since a law introduced in 2018 to help improve the relationship between the administration and the general public, you now have official permission to make mistakes in your declaration. You are presumed to be declaring in good faith and you have the right to make a mistake when making your declarations without being penalised from the outset. Any individual or company can amend, either voluntarily or if requested by the authorities, their mistake if it has been committed in good faith and for the first time. This doesn’t cover fraudsters or repeat offenders and whilst it means you can avoid a fine you will still have to pay any extra taxes that are due. Tax advisers and accountants are mad busy at the moment, so if you haven’t already found one to do your tax return they will be very reluctant to take you on now. However, some tax offices may allow you to make an appointment and bring your papers and information to do your tax return with them. You have an official right to make a mistake and as long as you submit something before the deadline, you can then correct it later.

    The first time I did a roast dinner as a student I had to call my grandma (a former professional cook) and I am happy to say no one got food poisoning! Like many things in life, these things can seem daunting to begin with, but if you do your best and follow the instructions, you will be proud of yourself once it is done and then you can go out and enjoy the sunshine with a large glass of wine!

    Spring cleaning your finances

    By Claire Cammack - Topics: Financial Review, France, Pensions, UK Pensions
    This article is published on: 22nd April 2021

    22.04.21

    “When the dust settles on Brexit!” has been heard many, many times over recent months and even the last couple of years. But what of it? With the UK and some former EU partners enduring a bitter relationship, and the UK’s Prime Minister seemingly giving free rein to his ministers, it is difficult for many to see a clear direction. Though a clear direction is coming, according to the financial expert sector – and it may not be welcomed by expatriates! Generally, it is accepted that the UK will introduce hard measures to hang onto funds and to introduce punitive tax penalties for those funds that leave the kingdom.

    Brexit seems to be “done and dusted”, yet where are we all? The global pandemic has clouded the issue but has forcibly created time for us to tackle the things that had been put off for too long. So what better time for a spring clean in your financial affairs.

    Pensions will be hit first, according to the experts, then lump sum investments, if not simultaneously. It will not only be the UK taking measures. France, particularly, will be looking to gather what they can from expatriates living in France. 

    Pensions health check

    You don’t have to sit back and wait for governments to take action – and endure stress in the process! There are actions that you can take now and the first is to book a financial review with your Spectrum adviser who has a wealth of experience and resources available and at your disposal. We can quickly identify opportunities to bring your finances under your control and maximise investment and tax efficiency.

    It’s not too late to act now to firm up your overall living status and ensure that all is in apple pie order for your peace of mind. Contact your Spectrum adviser for an expert appraisal of your situation.

    Why do I need a Financial Adviser?

    By Philip Oxley - Topics: Financial Planning, Financial Review, France, Occitanie
    This article is published on: 21st April 2021

    21.04.21

    Top 10 reasons!

    As 2021 progresses and hopes of a better year than the last increase, I thought I would write about a question that arises for me occasionally in social situations. From time to time, I am asked, “Why do I need a financial adviser?”, or sometimes it’s simply an assertion, “I don’t see the point of having a financial adviser”. My usual response is to give a brief overview of what I do, however, depending on the circumstances, I don’t always offer a thorough response and then subsequently regret not having taken the opportunity to fully outline the benefits offered from the work my peers and I do.

    I appreciate that in terms of popularity and reputation, my industry is not at the top of the pile – sometimes being undermined by the disturbing stories of people being scammed (particularly in the field of pensions), and also a small minority of advisers who are exposed as either not qualified/licensed to operate, or who fail to act in the interests of their clients.

    However, I know from the feedback that my colleagues and I receive from many of our clients that the work we do is appreciated and valued by many – sometimes for quite different reasons. So, I thought I would outline the benefits of why, if you do not currently have an adviser, you might want to consider exploring whether your finances could benefit from professional advice and ongoing support.

    This list is not meant to be exhaustive and I have tried to avoid a generic list, instead drawing upon feedback and anecdotal evidence from individuals – some clients, some not…yet! Hopefully, my list provides a selection of reasons why I believe the work we do can be of significant value to many.

    1. Saving money/growing money

    The fundamental purpose of my role is to help my clients save money, and to grow and protect the money they already have. Such savings can be made through lower fees, reduced currency exchange risk, tax-efficient investment structures, and ensuring the best pension scheme for the client is selected. These same actions can also have a positive effect on the growth and protection of a client’s money. By choosing the right investment, an impact can be made on reducing inheritance tax liability for loved ones. Furthermore, if the worst happens to you, by selecting the best pension structure, you can ensure that your loved ones can be beneficiaries of your entire pension, in accordance with your wishes.

    2. Greater choice of options

    Of the financial solutions that I can offer my clients, few (if any), are available through banks or insurance companies – schemes offered directly through these organisations are usually the company’s own in-house products. I am not suggesting that these options are not suitable, but the advantage of using a financial adviser is the breadth of choice and the ability to select the best available products that most accurately suit the individual. Also, whilst some financial products are available directly to the consumer, many are not and can only be provided in conjunction with professional advice.

    3. Sounding board

    Sometimes in life, it is nice to have someone to discuss important matters with. People often turn first to their spouse or partner, friends, and sometimes work colleagues. I often speak to people who believe that they have their financial affairs in good order, but they value having a professional and independent “financial health check” to confirm that they are on track, or to provide an objective perspective on some of the areas that might need some attention.

    4. Acting as your better conscience (or encouraging people to do what they know is right!)

    Let’s be honest, most people enjoy spending their money – whether it’s on their home (often, but not always, a good investment), clothes, food, entertainment, cars (virtually guaranteed to be money-losing, unless classic/vintage cars are your thing!), and holidays.

    It is not always easy to take a portion of your regular income and set it aside for the medium to long term, and of course, not everyone has the luxury of having a surplus at the end of each month.

    However, a good comprehensive financial review doesn’t just analyse your assets (e.g., pensions, investments, savings, property), and liabilities (e.g., mortgage, credit card debts, car, and business loans), but also reviews your income/expenditure and your long-term wants/needs, to help assess whether there is the capacity to save, and how much.

    A good financial adviser will encourage you to think about the long term and help you to take the right steps towards financial security.

    Do I need financial advice

    5. “I have no money to invest” / “I can’t afford to use a Financial Adviser”

    This is a response I occasionally hear, however, irrespective of financial situation – whether the individual’s money is invested in their business or home, or they live on a low income – I am always happy to conduct a financial review. I can usually share some valuable insights, even if the person does not subsequently become a client. Do not let these reasons put you off speaking to an adviser – my confidential financial reviews are free of charge, and there is no obligation to accept my advice (although, I am pleased to say, most people do!).

    6. Protection and risk

    Many people associate financial advisers with pensions or investing/growing wealth. However, a crucial part of good financial planning is about protecting any wealth that you already have, and making contingency plans for all possible disruptive events that might come your way. When conducting a confidential financial review, I always ask if such matters have been considered, and whether arrangements are in place to provide financial protection in all eventualities. Life insurance is not always necessary, but a will is essential – I can put people in touch with English-speaking professionals in France who can assist in both these areas.

    7. No time

    For those whose lives are extremely busy (I think many of us can relate to this category!), they simply do not have the time (and/or inclination – see point 9!) to look after their financial affairs. Often people know they should be devoting at least some attention to their long-term financial security, but just never seem to get around to taking action. Sometimes, these people are well-informed and know very clearly what their financial objectives are, but do not have time to implement their plans and would rather a professional undertake this work on their behalf.

    8. Retirement planning

    In this area, the work we do is not just about advising individuals on the importance of saving for the future or selecting the best scheme for their individual needs.

    For British nationals living in France who have private pension schemes in the UK, a proper analysis should be conducted to decide if it is best to leave their pension schemes where they are, move them to a UK-based SIPP, or possibly offshore into a QROPS. There is no one correct answer and I am not going to get into the detail of this now – it was the subject of my last article!

    The second critical element of this work is to forecast what level of income someone will require in their retirement once other sources of income reduce or cease, and to then plan how that need will be met through rigorous financial planning.

    retire

    9. No interest in financial affairs

    Of course, this is one that I struggle to understand! I have a relative, who will remain anonymous, who encapsulates the example perfectly. This is someone who is financially comfortable, but genuinely finds the subject of savings/investments (or anything to do with managing their money), of absolutely no interest – to quote, “Boring”!

    As long as their money is secure and providing some growth, then they will quite happily entrust as much of the decision making as possible to their financial adviser. The key to this working is to get to know the individual very well, understand their risk profile, and be clear on the circumstances of when they wish to, or must, be consulted on decisions.

    10. Knowledge/expertise

    The final reason to use a Financial Adviser (and I accept this is obvious, but I needed a tenth!), is for the knowledge and expertise they can offer on available products (relevant to the country in which they work). The good ones will ensure that they thoroughly understand their clients, establish solutions that align with the individual’s aspirations, risk profile, and ethical stance. It is important that your adviser is permanently based in France, works for a French company, and is properly licensed with the relevant regulatory authorities. Above all, make sure they are someone you feel a connection with, who understands you, and who you feel confident in establishing a long-term working relationship with to support your financial goals.

    In conclusion, last year was incredibly challenging for many people – both financially and emotionally – and whilst some of the restrictions we have all lived within have eased, realistically, it will be some time before life resumes with some sense of normality. Whilst everyone’s health – physical and mental – must always take priority, I honestly believe that knowing that your money is protected and growing tax efficiently, and that you have taken the necessary steps towards your long-term financial security, is one less thing for you to worry about and makes a small but important contribution towards peace of mind.

    Big brother is watching… or might be

    By Katriona Murray-Platon - Topics: France, tax advice, Tax in France
    This article is published on: 2nd April 2021

    02.04.21

    After the fun and festivities of March (or those that could be had in current circumstances) it’s time to get down to serious tax work in April. The tax forms and dates of submission have not, at the time of writing, been released so that will have to wait until next month’s Ezine but usually the forms are available around the second week of April. If this is your first year of declaring in France you will have to go to the tax office to get the paper forms to complete. After submitting your first paper return you should then be given details to allow you to log on to your online account and do future returns online. The paper returns you will need are usually the 2042, sometimes the 2042 pro if you have professional income, the 2047 for all foreign source income and the 3916 for bank accounts and assurance vies (section 7 of the form).

    The 3916 has recently been amended to take into account the new information that needs to be declared. Make sure you tick box 8UU for bank accounts and 8TT on the 2042 form to flag the fact that you have foreign assurance vies.

    Under Article 1649 AA of the French Tax Code, those tax payers who have foreign assurance vies must declare the policy number, the amount of the investment, the start date of the policy and the duration of the contract or investment, any top ups or payments or reimbursements of premiums made during the tax year and, if relevant, the amount of any withdrawals or the surrender value,

    Article 344 C of the Tax Code has now added new requirements concerning the information for foreign assurance vie policies which are:

    • The identification of the policy holder: name, forename, address, date and place of birth,
    • the address of the head offices of the insurance company or similar institution and, if relevant, the subsidiary which grants the cover,
    • the person covered by the policy, its reference numbers, the nature of the risks covered,
    • the amount covered by the policy and the duration of this cover,
    • the dates of any amendments to the contract, total or partial withdrawals, which have taken place during the calendar year.

    Our policy providers are aware of this new law and will send out the relevant information for you to add into your tax returns or attach as a document online.

    Those who have regular at home services and pay via CESU usually receive a tax credit for these expenses, 60% of which is paid in January. From June 2021 the tax office will be trialling a new system of immediately paying the tax credit for home help for those employers in Paris and the Northern departments who use the CESU system, before progressively rolling out this system across the whole country in 2022.

    UK Pensions to a QROPS,

    According to a study from the US bureau of Labor Statistics in 2015 which looked at the number of jobs a person held between the ages of 18 and 50, the average person will have had 12 jobs. This is during a span of 32 years, so therefore the the number is likely to be higher for a person’s entire lifetime. This means that you are likely to have several pensions with several pension providers without knowing the value, investment strategy, performance or fees on these investments.

    France has clearly realised this situation as well. Retirement plans for French companies are held by insurance companies, so when you leave the company you may not continue to receive information on what rights you have accrued. Now, thanks to new legislation, insurers must send the information on file to a centralised body. If you are or have been an employee in France you can go to the website info-retraite.fr to be informed of what rights you may have. The new law also requires employers to communicate a statement of the retirement products to those leaving the company. When I left my job in Paris I had a PEE (Plan d’Epargne Entreprise or company savings policy) which I had done nothing with. I was advised that as I was no longer an employee of the company this was just being eaten up by fees. I closed it down and reinvested the money into two assurance vies for my sons which are now growing nicely.

    Pensions health check

    The Spectrum IFA group offer a free review of your pensions. We will help you obtain the relevant information from your pension providers and prepare a free report on your current pension plans and their benefits and whether they can or should be combined into one self investment pension plan or qualified overseas pension scheme. As I often say to clients, I agree with the many eggs in baskets principle but it is better having your baskets on a shelf where you can see them rather than eggs hidden around the farm!

    If you have an SCI remember to put the 4th May in your diary (may the fourth be with you!) as this is the deadline for the income tax return for SCI companies that are not subject to corporation tax. This is also the deadline for accountants to file the income statements for those with industrial and commercial businesses (BIC), non commercial businesses (BNC) and agricultural businesses (BA). The deadline is extended to 19th May for online declarations. As yet the other tax filing deadlines are not known.

    In the finance law for 2020 (article 154) a new law allowed the tax and customs authorities to use certain data published on the internet (Law no 2019-1479 of 28.12.19). The decree implementing this data mining provision was published in the Official Law Journal on 13 February 2021 (no 2021-148 of 11.02.21). This means that the tax authorities are allowed, experimentally and for only three years, to use information published by tax payers on social media (Facebook, Instrgam etc), sales sites (Ebay, Leboncoin etc) and other networking sites such as Airbnb and Blablacar. After researching, analysing and modelling fraudulent behaviour, the tax authorities can then use this data. They do not however have unlimited power, they are subject to the CNIL (National Commission for Freedom and Information Technology) and Parliament, to whom a report must be submitted in August 2022 and August 2023. The data mining can only be used to track non disclosed business activities and false declarations of off shore domiciles. Only “deliberately divulged” information can be collected and used, access to which does not require a password or subscribing to the website. Private posts or comments from third parties cannot be used. The data must be erased after 30 days if it isn’t going to result in an investigation. Data on sensitive subjects such as political views, religious beliefs and health information must be erased after 5 days on the same grounds. Whether this experiment will be extended or not remains to be seen but in the meantime it is another reason to be careful what you put out on publicly accessible social media.

    If you have any questions or would like to speak to me about any of the points mentioned above please do let me know. Thank you to those who have got back in touch after reading my Ezine or have let me know that you are still enjoying reading these emails.

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    Katie Murray Spectrum IFA