French £8k expat fine shocker
Filed under: Tax
One move is to fine British expats living in France €10,000 if they fail to declare inheritance trust arrangements. And they have very little time to do this.
Need to know: Savings
If they don't inform the French authorities by Friday 15 June - the end of this week - then a €10,000 fine could be levied on them, claims the Mail. Those who haven't put their French holiday home inside a trust won't have to worry. But the move will surprise some, given that it could even affect trusts worth £1,000 or less.
The issue is partly cultural. Although France did not have an established trust law until recently, the courts did recognise the legal effects produced by some foreign trusts. But in recent years the French authorities have become wary of such vehicles, viewing them as a mechanism for tax avoidance despite their non-tax benefits, claims tax firm Blevins Franks.
£25k fine"The original trust law issued last summer stated that the trustees' reporting obligations apply from 1st January 2012," says Bill Blevins. "However, on 28th December the authorities issued new guidance which retrospectively changed the rules." Suddenly, trusts that were in existence as at 31st July 2011 became reportable.
"Any changes made to a trust between 31st July and 31st December 2011 must also be reported - additions, distributions, winding up etc. So even if you – as many people did - wound up a trust after 31st July but before the end of 2011, or if there are no assets in the trust, your trustees must still report."
Another tax source said the French approach was "a complete blunder bus. It's using a sledge hammer to crack a very small nut. There's not even any guidance on Trustee reporting yet."
Trusts valued at £200,000 could be impacted by a bigger penalty - €10,000 or a 5% charge. So if you've £500,000 in property and assets in the UK, you could be hit by a £25,000 fine if you fail to declare. If you think you are potentially liable you are strongly urged to take tax advice.