They also need to bear in mind that, whereas in the UK assets passing between husband and wife on inheritance or by lifetime gift are generally tax-exempt, in France (unless they have adopted the “community marriage regime”) this is not the case, and there will be French inheritance tax (called succession tax) to pay in cases where the value inherited exceeds €76,000. Sé bastien and Lucia may well have married in France and adopted this regime at the time; if not, they should still be able to adopt it and apply it solely to their French property. Those married in the UK can frequently make the declaration. The community marriage regime also has the effect of sidestepping French succession law, which favours inheritance by children over the surviving spouse. So if there are children the regime cannot normally be adopted because it could lead to the disinheritance of those children. French succession law can come as a shock to British investors or buyers of holiday homes. This law must always be considered, regardless of the residence or nationality of the owners. www.blevinsfranks.com, 020-7336 1116

Marjorie Mansfield and Paul Bradshaw, financial advisers at John Siddall Financial Services, say: Should Sébastien and his wife decide to sell their property, then French capital gains tax rules would apply. These are based on length of ownership: the gain liable to tax falls by 10 per cent each year after the first five. That means that after 15 years any gains realised would not be subject to French tax. However, when a non-resident of France living elsewhere in the EU sells a French property they have owned for less than 15 years, French capital gains tax of 16 per cent will apply. Residents of France must also pay social taxes, bringing the total to 27 per cent.

When buying property abroad for investment, it is essential that the position on capital gains tax is established. For example, in Spain at present any gains realised on the sale of property by a non-resident is subject to a flat 35 per cent rate, although the rate is under review and may be brought in line with the rate Spanish residents pay, set at 15 per cent.

UK residents who sell property abroad and realise a gain will need to declare it in the UK, where it may be subject to capital gains tax if it exceeds their annual capital gains allowance, currently £8,800 each. A credit will be given for any capital gains tax paid abroad. If Sébastien is not UK-domiciled, he should not have to pay UK capital gains tax on the sale if he does not bring the money back to the UK.
www.siddalls.net, 01329 288641

FACTS OF LIFE

• Overseas property websites, such as www.frenchentree.com and www.vefuk.com, provide information on the tax aspects of owning overseas properties
• Otherwise the best place to check on tax matters are the relevant government tax websites. For the UK, www.hmrc.gov.uk; for France, www.impots.gouv.fr
• Some sites have information in English for non-residents, for example, the Spanish tax website www.aeat.es (go to no residentes)
• For specific advice from a tax adviser: Grant Thornton, 020-7383 5100, www.grant-thornton.co.uk; Blevin Franks, 020-7336 1116, www.blevinfranks.com; John Siddall, 01329 288641, www.siddalls.net

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