11. French Capital Gains Tax
- Scope of the Tax
- Exemptions on Sale of Property
- Allowable Costs on Sale of Property
- Shares and Personal Possessions
- Taxation of Building Land
- Fiscal Representative for Non-Residents
- Sale of Property Abroad
11.7. Sale of Property Abroad
If you become permanently resident in France, and then subsequently sell your former home or other property outside of France you could become liable for French capital gains tax on the sale proceeds.
The administrative doctrine does appear to grant exemption to sellers who move from their main home and sell within a later reasonable period, but the scope of this to international buyers is not entirely clear. You can read more at Capital Gains and the Principal Residence.
Whether you are liable will also again depend on the terms of any double taxation treaty between France and your home country.
In the case of former residents of the UK resident in France a tax treaty signed between France and UK, operative from 1st January 2010, makes you liable for capital gains in France on the future sale of your former home. The tax is based on your Euro gain, not on your Sterling gain, an important factor given the movement in exchange rates over the years and which can therefore make a big difference to the calculation.
You will be entitled to the same relief on French capital gains tax as you would otherwise receive if the property was located in France. On that basis you will be entitled to relief based on the duration of ownership. The double taxation rules mean that where the French tax paid is greater than the liability in the UK, no tax is payable in the UK.
As a general rule, social charges (17.2%)) paid in France are not an eligible charge against tax payable in the Uk, although this may not be the case for those who, since 2019, only pay the reduced charge of 7.5%. This would apply to those who hold an S1 certificate of exemption. The change in law in 2019 may also make it possible to claim the 7.5% charge within the larger 17.2% figure. Nevertheless, a level of ambiguity and uncertainty remains, so good professional advice is recommended.
The 2010 treaty overturns a previous rule in which there was an exemption from capital gains tax by the UK tax authorities on the disposal of the main residence for a period of five years, and which was also exempt from capital gains tax in France.
In addition, since 2015, the UK has also imposed capital gains tax on the sale of property of former residents which you need to declare at Report and pay your Capital Gains Tax.
Nevertheless, only any gain since April 2015, and the final 18 months of ownership, normally qualifies for private residence relief. This period was reduced to nine months from April 2020.
An individual tax free allowance of £12,300 (2022/23) also applies, which is doubled for a couple.
As a non-resident of the UK you can use the calculator provided by HMRC to determine your liability. Individuals will pay UK CGT at the rate of 18% or 28% on net gain, depending on your income tax band rate.
You need to make the declaration within 60 days of the sale.
In 2019, liability was extended to include commercial property and land in the UK, as well as property 'entities', unless an exemption applies, with tax applied on gains since April 2019.
Separately, the Lettings Relief in the UK (previously worth up to £40K per person/property) will be reformed so that it only applies in a very limited number of circumstances.
If the capital gain realised abroad is exempt from tax in France, you do not need to file the above declaration, although you need to declare the gain on your French income tax return (F2042C).
If you have made a capital gain from the sale of real estate abroad, and if this income is not exempt from tax in France under an international tax treaty (as is the case for many countries including the UK, although partial relief is granted), you must file a tax return within one month of the sale to your local tax office Formulaire 2048-IMM-SD : PVI. Cessions d'immeubles ou de droits immobiliers. Capital gains are taxed at a flat rate of 19% (plus social charges) with the standard allowances and exemptions that apply.
If this income has been taxed at source, you can deduct from the French tax a tax credit equal to the amount of French tax calculated on this capital gain or to the amount of foreign tax, provided the foreign tax does not exceed the amount of French tax.
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