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Considerations such as tax and estate planning, structuring your investment portfolio, reviewing your pensions, and the legalities of inheritance law can sometimes feel arduous, but you should not procrastinate. The benefit of having all your finances managed in the right way will provide you and your family with greater peace of mind for your retirement days.

Applying for residence to retire to France

One of the first things you’ll need to research is how to apply for residence in France. Now that the UK has left the European Union, this is slightly more complicated, but easier than you may expect with the correct information and guidance.

There are two different types of residence in France that you should be aware of to plan your retirement more effectively – lawful residence and tax residence.

Lawful residence provides you with all legal rights of a French national, to live in France (to work in France will demand a different visa). Tax residence decides which country has the right to tax your worldwide income, capital gains and property wealth.

As a retiring British expat, you must understand the tax residency rules to ensure you declare the correct information to the French tax authority.

Long Term Visitor Visa and Visitor Residence Card

British citizens planning to relocate to France are likely to be suitable for a Long Term VLS-TS Visiteur Visa, followed by the Carte de Sejour Visiteur Residency Permit, as long as they have the means to support themselves financially in France without undertaking employment or self-employment, and have suitable medical insurance – be it private or public.

Tax considerations for retiring to France

The tax implications of retiring to France depend on whether you meet the criteria to be a French tax resident. Generally speaking, you will be considered a tax resident if you intend to reside in France permanently from the moment you arrive.

A common mistake is believing that tax residency is only based on how long you spend cumulatively within the country each calendar year. However, there are other criteria, such as where your main home is located, so it isn’t just about counting days. Meeting any of the criteria would ensure your tax residency and legally require you to declare your worldwide income, gains and property wealth.

There are opportunities to lower your tax liabilities in France; for example, an assurance-vie will allow you to reduce your taxable income without necessarily affecting your actual income.

Owning or renting French property

If you are thinking of buying a French home, you should know that the way you hold the property could have unexpected consequences from both a tax and inheritance perspective.

For example, if you go for joint ownership, you will have to decide whether the house would be owned en indivision (tenancy in common), en tontine (very similar to having a joint tenancy in the UK), or as an asset included in your marital community. A different approach could be to buy through a special kind of French company known as a Société Civile Immobiliére (SCI).

The message here is that there are options available to you, and you should explore all to discover which best suits your family situation and objectives.

It’s also important for you to be aware that you will be liable to pay French property wealth tax annually if the value of your worldwide real estate portfolio amounts to or exceeds €1.3m.

The local property taxes in France, known as taxe d’habitation and taxe fonciére, apply to both residents and non-residents.

• Taxe d’habitation– must be paid by either the person owning a French residential property or having primary use of it. The tax calculation is based on the notional value multiplied by the fixed tax rate of the locality. It is worth noting, however, that taxe d’habitation is being phased out and is expected to be abolished by 2023.
• Taxe fonciére– must be paid only by the owner of the French property. Calculation of this tax is achieved in two parts: tax on the building itself based on half of the notional rental value, and tax on the land the building is situated on based on 20% of the rental value, which is then multiplied by the fixed tax rate of the locality.

Exceptions and deductions are available for both of these taxes under specific circumstances.

Estate planning and inheritance

Planning your estate and the inheritance passed on to your loved ones is always important, but even more so if you own assets in France due to the complex succession regime there.

French inheritance tax and succession law differ from the UK. Succession tax rates and allowances are based on who the individual beneficiary is and, in some cases, can be high.  Also, France still imposes Napoleonic law, originally introduced to protect the family bloodline, which gives your children much more rights over inheriting your estate than your spouse has.

The ‘Brussels IV’ EU succession regulation, introduced in 2015, would allow expats living in France to elect the law of their country of nationality to apply to their estate on their death. Note, however, that controversial new legislation was introduced in 2021, which enables protected heirs to make a claim for the share of French assets they would have been entitled to under French ‘forced heirship’ law.

Since this legislation effectively overrides Brussels IV, it may be challenged in the European courts in the future, but the rule must be followed for now. Also, note that this only applies to assets within France; you can still use Brussels IV to distribute foreign assets according to the inheritance law of your country of nationality.

Carefully review your pension options

You have contributed to your pension funds for most of your adult life, and they remain an essential source of income throughout retirement. As such, you should review the structure of your pensions and weigh all your options to maximise your retirement savings.

You may be able to transfer your pension into a Qualifying Recognised Overseas Pension Scheme (QROPS), which provides certain advantages. Still, it would help if you explored every avenue to determine the most beneficial course of action.

Jason Porter is a Director of specialist expat financial advisers Blevins Franks and head of the company’s European Emigration Advisory Service.

He will analyse retiring to Portugal and Cyprus in November and December. You can read his article on Spain here.