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If you are lucky enough, the sale of your French property will result in you realising a gain on your investment. The downside to this is that the gain will normally be assessable to tax in France and again in the UK if you are UK resident.
Until recently, it was often the case that the French tax payable fell below the corresponding UK tax due and, being available as a credit to offset against UK capital Gains Tax (CGT), in the wider scheme of things the amount of French tax actually paid wasn’t so much of a concern.
With the hike in the French tax rate from 19% to 34.5% which took place in August 2012 and the reduced taper relief effective from February 2012, this is no longer the case. More often than not, French CGT will now far exceed the UK tax counterpart.
Even now, following general improvements to the French tax position from 01/09/2013, even though the total French tax may fall below the UK gross assessment, the peculiarities of these modifications and the anomalies brought about by HMRC interpretation of the Prelevements sociaux element of the French tax charge, means that the bottom line for the UK resident taxpayer has - more often than not - taken a turn for the worse again.
Whilst the notaire may be responsible for submitting the tax return (“2048-Imm”) and the fiscal representative, (when relevant), responsible for the payment of the tax, neither of them have any incentive to ensure such tax is at a minimum, despite the latter charging you!
Indeed, since the fiscal representative takes on the responsibility for any further tax arising from any tax office re-assessment of any French CGT declaration submitted following the sale, they have an incentive to do the opposite.
In our experience, typically, the fiscal representative will not:
Furthermore, when, from the viewpoint of the fiscal representative, there is an element of doubt over the initial CGT calculation or risk of additional tax being charged in the event of verification by the tax office, then they will look to withhold sufficient funds to cover the potential higher liability until such risk passes by. Normally, unless other information comes to light, this withholding period is 4 years beyond the date of sale
When selling your French property, it is therefore down to you to ensure you pay the minimum amount of French capital Gains tax (Plus-Values).
We are here to help you achieve that by addressing each of the points above – and others – as may be relevant under current French legislation.
On your behalf we will:
Certainly we cannot obtain favours and neither do we receive any remuneration from them!
Rather, our philosophy is based on the old adage of better the devil you know. Our familiarity with their working processes, together with our having reached a consensus as to the interpretation of the legislation, results in us being able to offer procedural solutions to problems which would otherwise have to be addressed from scratch if having to liaise with a less compliant fiscal representative, (of which there are many!).
Similarly, it does away with the need to submit an appeal to the tax office at a later date, (and the extra costs to you in doing so) should we fundamentally believe the fiscal representative is wrong in their calculation of the tax payable.
In terms of the fiscal representative's charges, this will vary according to the complexity of your case and the fiscal representative we turn to in order to obtain the best CGT outcome for you, (not all fiscal reps apply the same interpretation of the legislation).
However, for a reasonably straightforward case resulting in no French CGT and little or no risk to the representative, we can achieve fees as low as 900 E (+TVA).
Our services go as far as you want them to. When obtaining all necessary information and documentation from the notaire and yourselves necessary to minimise the CGT payable, we are then able to:
It may be clear that a taxable gain will not arise in France or the UK. Any losses arising for UK tax purposes, may be used indefinitely to offset UK Capital gains tax due on any other investments - shares, unit trusts, other investment property, gifts, and during Inheritance tax planning.
Charles Hamer are available to draft a capital loss assessment to submit and be approved by the UK tax office, for such use.
You may have already sold the French property and paid the tax due, as assessed by the fiscal representative or the notaire, but are concerned that you have overpaid.
Not to worry, if the sale took place less than 3 years ago* , we can:
*An appeal may be made at any time up to the 31st December 2 years following the year of the sale
Having reviewed the services that are available the next stage of the process requires more information from you to allow us to make an accurate assessment of any liability due in France and the UK.
To continue please contact our advising partner Jonathan Pawsey by email(Jon@charleshamer.co.uk), telephone (+44) 01844 218956