Take care with French tax laws

The dream of investing in overseas property has now become a reality for nearly £1 million Brits, many of who choose to buy a home in France.

But it seems that many people are getting themselves into difficulties because they are not up to speed on issues regarding French law, taxes and potential financial risks.

Know your French finance

Speaking to the Daily Telegraph, Ian Luder of accountants Grant Thornton said that he "never ceased to be amazed" by the risks people took when buying abroad and that more care needed to be taken regarding financial, tax and legal considerations.

Inheritance tax, for example, is often over looked by those who are buying French property, despite the fact that in some cases the owner cannot specify who will inherit the property.

Paul Wilcox of financial services company Way Group told the newspaper: "Whether it is a holiday home, an investment property or a place to retire to, it is important to look at inheritance tax planning, as there are steps people can take to mitigate this liability.

"In some cases people can avoid paying this pernicious tax altogether."

Inheritance tax in France

Tax laws in the UK differ substantially to those in France, with the latter providing a tax-free "allowance" to the spouse of the deceased of up to 76,000 euros (£51,150).

Children inheriting from their parents are given 50,000 euros before they are taxed but for non-relatives, even if they are long-term partners, there is no allowance and a 60 per cent tax on anything passed on.

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