Gifts to children? Act NOW before its too late

Watch out, there are rumours that the child inheritance tax and gift tax allowance is to revert to 50,000 Euros per child replacing the existing allowance of 159,325 Euros.

This was proposal was rejected in December 2011 but is to be voted on again in May 2012, and it is thought likely that the reduced allowance will be approved. It is not known whether the spouse exemption will be reduced from a full exemption to an allowance of 76,000 Euros.

If you are considering an absolute gift of assets to children (in your lifetime), you should get on with it quickly in case the allowances change. Remember that the French legal process is far slower than in the UK you should allow as much time as possible ideally a couple of months, in order to achieve this.

John Kitching, French Law Consultancy.

info@frenchlawconsultancy.com

French Property transfer tax increases due

John Kitching warns that Notaire fees have increased as of 23^rd February 2011, and there is a further increase against French Property coming into effect from 2012. French Property Transfer tax for transfers between co-owners of French property or on for transfers of French Property on divorce is set to rise from 1.1% to 2.5% as of 1^st January 2012. If you are considering a transfer, you had better act fast to avoid the increase. The rate applies as of the date of completion of the transfer deed.

For more information contact John Kitching of French Law Consultancy www.frenchlawconsultancy.com or email john@frenchlawconsultancy.com

French Tax Reforms 2011

French Tax Reforms 2011 - projet du loi de finances 2011 (French Finance Bill)

British owners of French Property should take note of proposed reforms to the French Tax system, especially concerning Inheritance Tax, Gifts, Wealth Tax and Tax Foncière. There are many proposed changes under the French Finance Bill for 2011, and John Kitching, who has been practising in French law for almost 10 years has outlined those that are most likely to affect his British clients. The existing rates for French Inheritance Tax and French Gift Tax can be seen on John Kitching’s previous posts on this blog, and an explanation of French inheritance law is available on www.frenchlawconsultancy.com website. The reforms detailed below are currently only proposals. However, the projet du loi de finances 2011 (French Finance Bill) will be voted on in July and may well take effect. Some of the key proposals are as follows.

French Inheritance Tax and French Gift Tax

The 35% rate of French inheritance tax is to be increased to 40% and the existing 40% rate will be increased to 45%. This is unlikely to affect the majority of estates where there is a spouse and children, as the spouse has a full exemption and children each have an allowance of €159,325 and have a generous sliding scale of tax above that value before reaching the higher rates of tax.

The current survival time for French Lifetime Gifts is 6 years, although it is to revert back to 10 years as was the case several years ago. The time limits will be retrospective and calculated from the date of death. For example, a lifetime gift that has currently passed its 6 year limit could still be assessed for tax under the 10 year rule if the donor dies within ten years of the gift.

Furthermore, French Gift Tax reductions based on the age of the donor are to be abolished, these had been set so that there was a 50% discount if the gift was made by a donor under the age of 70, if they were aged 70 to 80 the discount was reduced to 30%.

Taxe Foncière increase

There are also suggestions of a second Tax Foncière for non resident owners of French property, which will be assessed at 30% of the Cadastral Value of the property as of 1^st January 2012. It is not certain whether this will affect British or EU owners.

Wealth Tax

Wealth Tax will become payable on the whole value of assessed wealth where relevant assets exceed €1.3m. The current threshold is €800,000. It is not just the wealth exceeding €1.3m that is assessed for tax, it is the entire €1.3m (and above).

A rather peculiar system of tax discounting has been contrived to allow some leniency to those who only just creep into the Wealth Tax Band, as outlined below.

Wealth Tax bands and rates of tax

The fundamental rates of Wealth tax are:

€1.3m to €3m at 0.25% (on the entire amount)

€3m and over at 0.5% (on the entire amount)

€1.3m to €1.4m leniency

However, if your assets are between €1.3m and €1.4m a reduction applies, calculated as follows:

The wealth tax is calculated at the standard rate (€1.3m x 0.25%) which gives a wealth Tax figure of €3,250. However, the tax is then multiplied by 8, and then reduced by an allowance of €24,500, which gives a Wealth Tax bill of €1,500, a discount of €1,750. As the figures approach the €1.4m figure, there is much less of a discount, with €1.39m returning a tax bill of €3,300 after applying a discount of just €175

€3m to €3.2m leniency

A similar discount applies where assets stray into the €3m bracket. Where taxable assets are between €3m and €3.2m, the tax rate of 0.5% applies, the tax is then multiplied by 8.5 and an allowance of €150,000 is applied.

John Kitching is a bilingual Solicitor and has been practising in French law and estates for almost 10 years. John acts as a Consultant Solicitor to many firms of Solicitors and Notaries Public when they need his expertise, and also helps individuals on a freelance basis.

www.frenchlawconsultancy.com

email: info@frenchlawconsultancy.com

French Capital Gains tax 2011

French Capital Gains tax 2011

A new increased rate of 19% has been introduced for 2011 for French Capital Gains tax. This rate applies to non-French residents of EU who dispose of French Property, and is applicable for completions as of 1 January 2011. French tax residents pay an additional social tax of 12.3% on top of the increased French Capital Gains tax rate of 19%.

As was the case prior to 2011, French property is exempt from French Capital Gains tax after 15 years of ownership, although UK tax residents would need to declare any gain in the UK and may still face UK capital gains tax.

French Capital gains tax is payable in full during the first five years of ownership, and then each full year of ownership after the fifth year attracts a reduction of 10% per year (resulting in a full exemption after 15 years). Like in the UK, there is a primary property exemption for French Capital Gains tax, although as the French Property property must be your primary residence, this exemption is generally only available to French residents.

For any queries, please contact John Kitching on info@frenchlawconsultancy.com John is a qualified Solicitor specialised in French law and estates. For further information on French law, please visit the French Law Consultancy website www.frenchlawconsultancy.com

French Inheritance tax rates 2011 confirmed

The French inheritance tax rates for 2011 have been confirmed, and are in line with the rates expected in the earlier post on this blog. The rates are applicable retrospectively from 1 January 2011.

French Inheritance tax rates 2011

Relationship	2011exemption	Tax rate on excess
Spouse/PACS (lifetime Gift )	80724 €
Spouse / PACS (inheritance)	Exempt	Exempt
Children / parents	159325 €	5% to 40%
Grandchildren	31865 €
Great Grandchildren	5310 €
Siblings	15932 €	24430€ at 35% then at 45%
Nieces/nephews	7967 €	55%
General for others	1594 €	60%

For any queries or for further assistance with French Inheritance, succession assistance or French property assistance, please contact French Law Consultancy www.frenchlawconsultancy.com or email info@frenchlawconsultancy.com

French Inheritance tax rates 2011 (TBC)

The French inheritance tax rates for 2011 are expected to rise by 1.5% based on the 2010 rates. the exact rates will be confirmed during the first few weeks of 2011. The estimated French inheritance tax rates for 2011 are set out below, for illustrative purposes only. The official rates will be posted online in due course.

French Inheritance tax rates 2011 – anticipated rates

Relationship	2011 estimated exemption	Tax rate on excess
Spouse/PACS (lifetime Gift )	80724 €
Spouse / PACS (inheritance)	Exempt	Exempt
Children / parents	159325 €	5% to 40%
Grandchildren	31865 €
Great Grandchildren	5310 €
Siblings	15932 €	24430€ at 35% then at 45%
Nieces/nephews	7967 €	55%
General for others	1594 €	60%

For any queries or for further assistance with French Inheritance, succession assistance or French property assistance, please contact French Law Consultancy www.frenchlawconsultancy.com or email info@frenchlawconsultancy.com

French property market still rising

In the Paris area, the number of sales for the 3rd trimester has increased by 23% year on year, and in France generally the market activity is broadly back to where it was prior to the financial crisis.

Property prices in Paris Ile-de-France continue to rise, with prices up over 10% year on year, and up 4.1% over the three months to September.

Is it time to invest before prices go up further?

Should you make an offer on a property and need the contract promptly checking before paying a deposit and before signing it, please contact French Law Consultancy www.frenchlawconsultancy.com

Civil Partnership now recognised in France

After years of controversy, France has finally amended its legislation and now recognises UK registered Civil Partnerships and affords them similar status and benefits to a French PACS agreement, including an exemption for inheritance tax purposes.

The new law came into effect on 14 May 2009, although for Civil Partners who have paid tax on a gift or inheritance since 22 August 2007, a reclaim may be possible.

Prior to 14 May 2009, UK Civil Partners leaving French property to their Civil Partner would have faced inheritance tax at 60%, the rate applicable for transfers to non-blood relatives. There is a full exemption for spouses and for PACS couples. The PACS agreement allows same sex or different sex partners who are not married, to register their partnership and benefit from similar tax breaks to married couples, including a full exemption on inheritance tax. However, you had to be free to marry in order to be eligible to register as a PACS couple. UK Civil Partners were not able to register for this reason.

An interesting footnote to the new law allows a reclaim of tax for Registered Civil Partners where the date of the gift or the date of the probate was after 22 August 2007

For more information please contact French Law Consultancy www.frenchlawconsultancy.com

French property price rise continues

According to the Paris Chamber of Notaires, property prices in Paris have increased by 5.1% year on year, and in 2010 in France as a whole prices are expected to follow suite, although twice as slowly. The property market is attracting more movement with 700,000 sales agreed in 2010, this is thought to be due to the return of foreign investors and the continued low interest rates. If you are considering purchasing a French property while the prices are affordable, and with a pound Sterling still worth around 1.20 Euros, make sure you read the article below before signing any French contract. For more information on French Property Law see www.frenchlawconsultancy.com

Selling French property

Whilst sales of French property are slowly picking up as Sterling has regained some ground against the Euro, John Kitching, French law Solicitor reports that there are plenty of British sellers of French property wanting to sell before the exchange rate creeps too far towards Sterling.

As things stand, a healthy profit can still usually be had for those who purchased French property over 2 years ago when Sterling was strong against the Euro, and despite the recent gains, there is still a decent healthy 20% profit to be had even where the property Euro value has remained the same. Make sure you seek independent legal advice before signing Agent contracts or sale contracts, and make sure that you declare the currency gain for capital gains tax. To maximise your gains, be sure to consider using a reputable currency dealer, as there may be significant savings to be had compared with using your high street bank. We can recommend currency dealers, and advise on all contractual issues.

Remember, the golden rule: do not sign anything without taking proper independent legal advice.

French Law Consultancy can usually check basic documents on a same day basis, so there would be minimal delay. Take advice, get it right and relax. For more information visit www.frenchlawconsultancy.com or email John Kitching, a bilingual French law solicitor john@frenchlawconsultancy.com or telephone +44 (0)1663 74 54 88

Found a French Property for sale? Be careful what you sign!

Browsing through the windows of the Agent Immobilier, you may well stumble upon the French property of your dreams. You are only in France for a week or so and you want to make sure this dream French property does not escape you, so you go into the Estate Agent, make an offer and sign whatever they tell you to sign, and pay whatever deposit they ask for. On the journey home, you start to reflect on things. What have you just signed? It was in legal French, did you really understand it? The Agent said it was OK to sign, and he seemed trustworthy....but he would wouldn't he? Where did you really pay your deposit to? Can you recover the deposit if you pull out of the purchase? Have you committed yourself to harsh conditions? What if the property has something wrong with it?

I hear this scenario on a regular basis, and clients hesitantly approach me realising that they have perhaps not exercised the level of caution they would if they were buying a property in the UK.

Ideally, you should never sign anything that you have not had checked by an expert independent lawyer familiar with English law and French law. You should not pay a deposit without understanding where it is going and what the terms are for holding and returning it.

It can be hard when you are being pressured to sign and the Agent reassures you that everything is OK, but a good agent will not object to you having the contract independently checked, and make no mistake, whatever you are asked to sign will be a form of contract committing you to its terms, whether called a pre-contract or an offre d'achat or a promesse de vente. Get it checked. We can usually check basic documents on a same day basis, so there would be minimal delay. Take advice, get it right, relax and enjoy your dream French property purchase. For more information visit www.frenchlawconsultancy.com or email John Kitching, a bilingual French law solicitor john@frenchlawconsultancy.com or telephone +44 (0)1663 74 54 88

France out of World cup

Those who registered an interest in a free French Will package should France have made it through the group stages will be disappointed that Les Bleus did not manage to pull it off, eventually losing 2-1 to South Africa. However, the French Will package is being offered to them at half price as a gesture of good will. Eyes now turn to England to see if they can scrape through against the mighty Slovenians!

Free Will if Les Bleus make it through!

Oh dear, losing against Mexico and drawing against Uruguay is not quite what France was expecting. They are on the verge of failing to qualify for the knock out stages. However, if France DO qualify for the next round of the 2010 football World Cup, I should be happy to offer a Free French Will package. All you need to do is register your interest with me before France's next match kicks off at 3pm on Tuesday 22nd June 2010.

Simply email john@frenchlawconsultancy.com with the subject heading Free French Will and give your name, address and contact details in the email.

Good luck!

John Kitching

French Law Solicitor

www.frenchlawconsultancy.com

£1 finally hits 1.20€ - highest for 18 months

According to some currency dealers, the technical levels for exchange rates have finally attained 1.20 Euros per pound, the strongest position of the pound against the Euro for 18 months.

This is still only the technical level for large commercial level currency transactions, but it remains the highest level since 2008, and results from the recently weakening Euro and a few days of volatile currency rates. The Euro is currently at its lowest rate against the US dollar since April 2006.

The 1.20 €/£ rate is expected to trigger a flood of property transactions from purchasers who have secured the exchange rate through a "forward contract", although the rate has not yet passed down to all but the most expensive property transactions. However, given the volatility of the markets over the past weeks, this level may come or go rapidly. If you are considering purchasing French property, it would be wise to contact a currency dealer to discuss securing an exchange rate and to discuss the prospects for the currency market.

We are happy to independently recommend currency dealers if you require assistance.

John Kitching French Law Solicitor www.frenchlawconsultancy.com info@frenchlawconsultancy.com

French Property prices - Paris on the up

The average French Property price continues to rise in Paris, according to a study from website drimki.fr . As shown from the data, location is all important. Some areas perform well, while others continue to struggle.

The chart below shows the district of Paris, the average price per square metre in the district, and the monthly price variation.

Prix de l'immobilier	Prix moyen / m2	Evolution mensuelle
Paris 1er	8074 €	0.94%
Paris 2eme	7004 €	1.43%
Paris 3eme	7647 €	0.73%
Paris 4eme	9227 €	1.52%
Paris 5eme	8139 €	1.89%
Paris 6eme	9646 €	1.06%
Paris 7eme	9077 €	-0.11%
Paris 8eme	7868 €	-0.87%
Paris 9eme	6578 €	1.54%
Paris 10eme	5897 €	1.63%
Paris 11eme	6175 €	1.94%
Paris 12eme	5941 €	0.54%
Paris 13eme	6060 €	1.88%
Paris 14eme	6685 €	1.18%
Paris 15eme	6666 €	0.5%
Paris 16eme	7437 €	-0.18%
Paris 17eme	6066 €	1.06%
Paris 18eme	5737 €	1.45%
Paris 19eme	5090 €	1.88%
Paris 20eme	5252 €	0.16%

John Kitching www.frenchlawconsultancy.com

info@frenchlawconsultancy.com

France to get average speed cameras

Watch out, the fast, quiet autoroutes of France are going to be monitored by average speed cameras, as used in England, Germany, Norway and Italy. Don't panic just yet though, they are not scheduled to be introduced until the summer of 2011.

Source: www.leparticulier.fr

Paris apartment prices up 12% since 2009

According to French Estate Agents MeilleursAgents.com the price of apartments for sale in Paris has increased by 12% year on year to the 1^st May 2010.

The average price per square metre is for a Paris apartment is now 6730€, which in itself reveals an increase of 2.1% between 31 March 2010 and 30 April 2010.

The reasons for this increase are set out by property experts Immobilier-danger.com as being fourfold: Low Interest rates; safer investment that the volatile stock market; few properties on the market; and, as ever, location location location.

This property price increase is not mirrored throughout France as a whole, as French property prices generally have not increased dramatically. However, Paris and the classic desirable locations seem to be weather the storm, and remain as popular and as expensive as ever.

John Kitching, French Property lawyer

www.frenchlawconsultancy.com

Champs Elysées has gone green!

The young farmers have turned the Champs Elysées into a green agricultural zone for two days!

Have a look at the pictures and videos on the bbc website

http://news.bbc.co.uk/1/hi/world/europe/10143393.stm

There is also an interesting article on how the French wine industry is struggling due to the recession in Britain and the relatively weak pound driving up import costs. Britian is the biggest importer of French wine in the world... http://news.bbc.co.uk/1/hi/world/europe/7969564.stm

Eco Renault may face court action over name

An interesting French news article on the bbc website reports that Renault's new Zero Emission car (ZoE) may face court action over plans to name it Zoe. Parisian Zoe Renault, who has no link to the car maker, has sought legal advice to prevent the car giant from using her name for the vehicle. She claims that it would cause distress to hear phrases such as "Zoe Renault has broken down". Other women named Zoe, one of the most popular recent French names, are also signing a petition against Renault using the name.

Source: http://news.bbc.co.uk/1/hi/world/europe/10135873.stm

Thinking of selling? Act quickly before taxes go up

It is widely expected that the rate of UK capital gains tax is set to rise when the new coalition government announces its emergency budget. It is thought that any tax rises will come into force from April 2011, although that may be optimistic. Capital gains tax is currently at 18%, and it is expected that it will rise to mirror income tax rates which are 20% for lower rate tax payers and 40% for higher rate tax payers, with a possible 50% band for those earning over £150,000 per annum.

Please remember that gains on French property must usually be declared in the UK as well as in France. Capital gains tax paid in France can generally be offset against UK capital gains tax to avoid paying the same tax twice. It is worth pointing out that even where a French property is exempt from French capital gains tax, it is likely to be subject to UK capital gains tax for UK tax residents.

If you are considering selling your French property, it may be prudent to consider starting the ball rolling sooner rather than later before any tax rises, and ensure that you seek advice regarding mitigating the capital gains tax. Remember: do not sign an estate agent's agreement or sale contracts without getting them checked.

The Times has given five top tips to reduce your UK capital gains tax, click here.