A report on the Daily Mail’s ‘This is Money’ website claims the 200,000 British expats in France are in a frenzy as they face a shock stealth tax on Friday (15th June).
The article states that the Paris tax office is to demand “for the first time” that all UK expats inform it of any inheritance trusts that they are named in by the end of this week in order to “squeeze extra cash from foreigners.”
However, this is not quite the case.
France has always deemed trusts as illegitimate, and what is happening on Friday is simply a clampdown on what has always been tax avoidance under French law.
As trusts have never been accepted, all those residing in France of any nationality, including the French themselves, should have a will and not a trust. Therefore, this clampdown is not designed to specifically target foreign residents.
The clampdown on tax avoidance has been announced, as is routine, for the deadline day for tax returns to be filed online for all residents.
As in Britain, in France, all incomes, bank accounts, investments and trusts must be declared in tax returns each year. After all, avoiding tax is just as illegal in France as it is in the UK.
There is no “stealth ploy”, as the press report states, because this clampdown on trusts was announced by the previous French government.
Similarly, the IFAs in France contacted by iexpats.com said they were “unaware” of any of the “chaos and confusion among expats” that was alleged in the article.
However, if expats have not been told that trusts are not being accepted in France, then they have been ill-advised and should speak to their financial advisor. But for the vast majority of those who are within French law, there is nothing to worry about Friday’s clampdown.