Money and tax issues - in Languedoc, France

Importing and exporting money

Once you have taken up residence in Languedoc (or elsewhere in France), you can have bank accounts in the UK and import money into France (and shift it out again) without limitations.

Be aware that you may well get letters from your bank asking you the reason for the transfers if they are of significantly large amounts – French officials take a dim view of money laundering and tax dodging).

If you are looking to make a one-time transfer of a large sum (to buy a French property, for example), or to transfer sums of money from the UK to France on a regular basis, look into using a currency exchange specialist. By taking a fixed rate deal, you can secure the exchange rate at which you buy for up to two years ahead (handy if you think the exchange rate is going to get worse, but obviously not so great if it goes against you).

Otherwise, your UK bank can move the money for you by transfer (virement) – a procedure which takes 5 – 7 days. Many anglophones in France bank with Credit Agricole, a French bank with a dedicated English-language section called Britline (www.britline.com).

Be aware that France is more cash-based than the UK. Historically, French cheques could be issued without a cheque card for amounts of less than €50, which lead to fraud. Consequently, many businesses no longer accept cheques, taking debit card or cash payments instead. Some impose a minimum sum for debit card payments, so it pays to always have some loose change handy!

Tax: the basics

High social security contributions mean that French taxes seem steep. However, income tax is comparatively low, and there are many allowances you can take advantage of.

Find yourself a good, English-speaking accountant to get you off to a good start. Ask fellow ex-pats, or post a message online (try the Money and Tax section of the Crème de Languedoc forum for starters).

Alternatively, the French Chamber of Commerce in London can provide details of Anglo-French tax consultants (see www.ccfgb.co.uk or call +44 207 092 6600). Many advertise in UK magazines like French Property News and Living France (you can subscribe to these titles here).

If you plan to make France your place of permanent residence, resign yourself to the fact that you’ll be liable for tax here. If you are domiciled in France (i.e. if you’re resident for 183 days in any one year, or principally employed here, or your main residence is here, or your centre of economic interest is here), then you’ll be taxed on your entire worldwide income, from all sources.

Even pension lump sums that would be tax-free in the UK are taxed as income in France – so talk to your accountant to see if it would make sense to take your lump sum before you make the move.

If you are not domiciled in France, you are liable to pay taxes in France on any income from French sources (e.g. rental income from property in France, or capital gains tax as a result of selling a French holiday home).

In the case of retired Brits settled in France, a UK state or occupational pension will be classed as income and taxed in France.

France has a double-taxation agreement with all EU countries, including the UK, which means Brits are exempt from paying tax twice (thank heaven for small mercies), regardless of where you live or earn your money.

Paying income tax in France

There is no PAYE (pay as your earn) system in France. All French residents are expected to submit a tax declaration each year (in April), regardless of whether they are employed or self-employed.

The tax return (la déclaration de revenues) usually turns up in the post in early spring each year. Fill it in yourself, if you feel confident. If you need help, you can ask at your local tax office, called the Centre des Impôts (going in person may elicit better results that contacting them by phone). Alternatively, enlist the services of an accountant.

Return the déclaration and your tax demand (the avis d’imposition) will turn up in the summer. You can pay in installments, but obviously it helps if you have put the money aside – not something we PAYE-pampered Brits are used to doing!

You may hear talk of the ISF (Impôt de solidarite sur fortune), or wealth tax. It’s aimed at high net worth individuals and kicks in at €732,000 (taking into account property, antiques and art objects), so with a bit of luck (depending on how you look at it), ISF will not apply to you.

Tax: where to find more info

The Tax chapter in Patricia Mansfield-Devine’s Living in France (Harriman House) is very helpful; order it here.