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French Legal Issues
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 08/05/2008, 16:25
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geoff
 
Joined on 06/05/2008
france
Posts 69
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Re: Definition of 'domiciled'
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 martynandsue wrote: | |
Can any kind soul sort out what it means by being domiciled (in France or UK), specifically in relation to IHT/French succession laws. My UK Financial Adviser reckons that, even though I and the OH are just about to retire permanently to France, we will not be considered to be domiciled in France and therefore will not be subject to French IHT, but rather to UK IHT. Is he right? We will of course be ordinarily resident for tax purposes - he agrees that - but to be subject to French IHT he says we will need to be considered domiciled to France. He does not agree with Siddalls, with whom we had an initial meeting a few months back and who did not mention domicility (?) rather how French succession and inheritance laws would affect us.
Martyn
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Domicile =place of residence
So when the time comes (a long time yet we hope) if you are still living in France French law.
But there are ways to put off IHT till the passing away of the last member of the pair.
G
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08/05/2008, 16:31
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Sunday Driver
Joined on 07/10/2005
Deux Sevres (79)
Posts 2,752
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Re: Definition of 'domiciled'
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| martynandsue wrote: | |
My UK Financial Adviser reckons that,.......
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He's obviously unware about Article 3, paragraph 2 of the French Civil Code which stipulates that real property located in France, even if it belongs to foreigners, is subject to French law. Other assets (bank accounts, securities, furniture and so forth) are considered as being located in the place of the deceased’s last residence - in your case, that's be France as well.
Siddalls know all about French succession law, but if you're in any doubt, consult the notaire who will be handling your house purchase.
Waddya mean it's only Saturday......
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08/05/2008, 17:06
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Will
Joined on 22/09/2004
Sussex & 50 (Mortainais)
Posts 4,727
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Re: Definition of 'domiciled'
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'Domicile' in France is more or less interchangeable with 'residence' as far as tax is concerned. However, things are considerably more complicated in Britain - HMRC publication IR20 explains it, available online here . France does not have the same concept of 'ordinary residence' as in UK; indeed it has quite different fiscal residence qualifications. Broadly speaking, if you retain ties in Britain (eg property or other investments, or dependent family members) you may not necessarily give up your UK domicile, even if you are living permanently elsewhere. So your adviser may be correct, but not knowing your full circumstances and not being qualified in taxation issues I could not possibly confirm this.
The effect of domicile on inheritance issues in UK is explained in the relevant section of the HMRC customer guide to inheritance tax, here.
But double taxation agreements can override these general guidelines - so you definitely need to contact the tax offices or another qualified professional if these issues are important to you.
Will
intentionally blank signature
http://www.vienormande.com
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08/05/2008, 17:57
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Pickles
Joined on 23/08/2004
Posts 174
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Re: Definition of 'domiciled'
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| martynandsue wrote: | | Can any kind soul sort out what it means by being domiciled (in France or UK), specifically in relation to IHT/French succession laws. My UK Financial Adviser reckons that, even though I and the OH are just about to retire permanently to France, we will not be considered to be domiciled in France and therefore will not be subject to French IHT, but rather to UK IHT. Is he right? We will of course be ordinarily resident for tax purposes - he agrees that - but to be subject to French IHT he says we will need to be considered domiciled to France. He does not agree with Siddalls, with whom we had an initial meeting a few months back and who did not mention domicility (?) rather how French succession and inheritance laws would affect us. |
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I have looked into this issue and can only agree with Will and SD's comments, except that whereas Will is being somewhat generous towards your UK Financial Adviser by giving him the benefit of the doubt, I would not be quite so charitable - unless your circumstances are not actually as straightforward as they would at first appear. The UK definition of domicile is specific to the UK and works to the benefit of people who may be resident and/or ordinarily resident in the UK but because of their place of birth or parentage are not considered domiciled in the UK. France has no such distinction; if you have your main/habitual residence in France then you will become subject to French IHT rules on death, and these will in general cover your worldwide assets. You may still be "domiciled" in the UK as far as HMRC is concerned, but that will NOT concern the French tax authorities because they don not have the same definition. There may be (legal) things that you may be able to do in advance of a move to France that may result in an advantageous treatment compared with someone who has lived in France all their life, but for that you will definitely need expert advice - and I have to say that you will need to see a specialist because the average UK financial adviser could not be expected to know about such things.
Regards
Pickles
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08/05/2008, 18:01
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Anton Redman
Joined on 23/08/2004
Gironde
Posts 1,921
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Re: Definition of 'domiciled'
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Agree with Pickles but in some cases think the UK definition of Domicile is invoked to draw people into the UK tax net who might otherwise escape. Mind you I have resigned my London clubs and have not purchased a plot in theUK.
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08/05/2008, 18:04
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LesLauriers
Joined on 23/08/2004
Posts 820
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Re: Definition of 'domiciled'
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My understanding is that you will be subject to French inheritance tax and then UK inheritance tax, with any French tax being off set against UK tax.
This will apply to all UK ex pats unless they formally renounce their UK domicile and terminate all financial ties with the UK.
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08/05/2008, 18:34
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martynandsue
Joined on 21/04/2008
Hampshire and soon near Lalinde
Posts 9
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Re: Definition of 'domiciled'
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What swift responses and succint comments - many thanks all. V. concise summary thanks, Pickles. I thought my IFA was being a bit insular. Our circumstances should be very straightforward (no offspring from previous marriages etc - just our two girls and a life time (well it feels that way!!) of monogamy), and we have already thought we might go down the line of a Communaute Universelle regime. I will be going for further specialist advice i.e. the Siddalls type of advice rather than my IFAs preferred contact - who is a UK IHT specialist. I look forward to any further comments.
Martyn
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08/05/2008, 18:42
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ams
Joined on 07/08/2007
Posts 273
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Re: Definition of 'domiciled'
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You could continue to have a liability for UK inheritance taxation as well as French inheritance taxation despite the fact that you have relocated permanently from the UK to France.
If for example you have been in France for less than 3 years prior to your death, it may be considered by the UK fiscal authorities that you retain UK domicile and thereby a liability for UK inheritance taxation on your worldwide assets.
To avoid problems make it clear that you have relocated permanently to France.
If however you retain UK assets you will be liable for UK inheritance taxation, despite being resident in France, however the DTT then comes into play.
Seek professional advice from someone that understands both taxation systems.
ams
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France Forum » Legal and Finan... » French Legal Is... » Definition of 'domiciled'
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