Although Britons with holiday homes in France could be worse off due to a new annual tax on their properties (as reported in last week’s MoneyWeek), “people who become resident in France could find themselves better off”, says Alexandra Goss in The Times. From 1 January 2012, the 0.55% annual wealth tax levy on net assets between €800,000 and €1.3m will not exist. The tax rate on assets above €1.3m will be 0.25%, rising to 0.5% for those above €3m, and will apply to the entire net value of your French assets. In France, the top tax rate for incomes above €70,000 is 41%, not 50%.
This means, says accountants KPMG, that someone earning £150,000 would pay tax of £53,000 in Britain compared to £49,540 in France if he were single, and £39,815 if he were married and this were a couple’s total net taxable income. Mortgage terms are good in France too, with 100% mortgages available and variable rates starting at 2.5%. As Simon Smallwood at mortgage broker International Private Finance notes, “Having debt secured against your property helps reduce its net value and your wealth tax bill.”