Common financial mistakes to avoid when moving to France
Anyone watching the Tour de France or Paris Olympics on TV from abroad this summer will know – France is a beautiful place to live.
However, relocating can bring various challenges and risks. We asked the experts at Kentington’s tax and investment consultants for some common mistakes to avoid.
Prospective movers to France must be open-minded regarding their financial arrangements. Along the way, while some aspects of a given person’s tax and financial management in France might be slightly different from what you may be accustomed to, others might be in total contrast to what you are familiar with.
Financial mistakes can have severe consequences for expats in France. They could lead to overpayment of taxes, fines, and even investigations by the tax authorities. Understanding and avoiding these mistakes is crucial to maintaining financial stability and peace of mind.
So, what are some of the most frequent mistakes that people make regarding their finances in France?
Misunderstanding French tax residency. This is a crucial financial aspect for anyone planning to move to France. It’s a common source of confusion and can significantly impact your financial arrangements.
Facing unexpected tax liabilities when transferring assets. With effect from January 2018, a new wealth tax – Impôts sur le fortune immobilière (IFI) – was introduced in France. This is a tax on an individual’s real estate assets. Both non-residents and residents are assessable to this tax on their property assets.
Mismanaging pensions and retirement funds. Given each individual’s unique circumstances, it’s crucial to seek expert advice to navigate the intricacies of this financial aspect. This will enable them to assess the full implications of any move their actions for their long-term income and tax payable, and also provide a sense of reassurance and confidence in their financial planning.
Poor inheritance and gift tax planning. A key element of French inheritance law is the concept of forced heirship. This requires a portion of a deceased individual’s estate in France to be passed to their children and, in some cases, their spouse, irrespective of whatever wishes the deceased might have communicated in their will.
Ineffective handling of currency exchange and banking. It might be a sound decision to introduce some level of diversification to your assets, including concerning currencies. Shopping around for the best possible money transfer rates may also be sensible.
Putting all your investment into property. While property can certainly be an excellent investment, this is likeliest to be the case if it forms just one part of a balanced estate.
Not being prepared before moving to France. All too often, expats make the move without adequately organised financial affairs and miss out on opportunities to mitigate their tax liabilities.
Conclusion
Expats moving to France can help ensure they get the most out of their new life in France by taking financial advice from French-regulated advisers, understanding the tax residency rules in France, and getting their financial affairs in order ahead of their move.
Need individual advice? Find out more at kentingtons.com