How to plan your long-term finances when moving to France

You do not just wake up one morning and say, “I think I’ll move to France this week.”

On second thoughts, perhaps you do! But even if you think that, you are unlikely to follow through immediately with your new-found dream. 

The point is, moving countries is unlikely to happen on a whim. A well-planned move increases the likelihood of it being successful.

There is the administrative side to sort, for one thing. Since Brexit, this has become slightly more time-consuming for British citizens in that they must now apply for a visa prior to moving. 

Otherwise, little has changed and so long as you are well organised, there will be few barriers. US citizens, of course, have always had to apply for a visa.

Read more: Permanent residency cards in France: 2024 renewal rules

How to be tax-efficient in France

The other major subject to think about is your finances. For retirees or early retirees, for example, you may have been saving tax-efficiently in your country of origin, be that the US or the UK, all your working life. 

Now, suddenly, you are considering moving to another country. What does that mean? Should I sell everything before leaving? What works tax-efficiently in France, and what doesn’t? Perhaps I shall be so heavily taxed in France that I shouldn’t move after all?!

Fortunately, with regard to this last question, I can reassure people this is rarely the case.

Indeed, returning to the example of retirees from the UK, this cohort is actually, more often than not, better off in France than in the UK, assuming planning and careful execution of course. 

For US citizens, things are more complicated because the IRS requires them to declare their income in the US, regardless of where they reside. 

This makes efficient tax planning using French investment vehicles near impossible, due to incompatible reporting standards. As a result, the rest of this article will unfortunately not be wholly relevant to US compatriots here in France.

You might like to consider that moving country is akin to changing jobs. While some of the knowledge you have garnered in the past will help you in your new position, in other aspects you are met with a clean slate, from which you must start again from scratch. 

It is a time in your life when you are most likely to make mistakes, so you should be ready to lean on people around you and those with a greater knowledge of your new environment.

Read more: How do French financial products compare to those in UK and US?

Key tax questions when moving to France

While impossible to give all the answers in this article, particularly as they are likely to be different on a case-by-case basis, let us consider some important questions that somebody moving from the UK to France should be asking themselves.

• How much income tax will I pay in France?
• How will my ISAs, pensions, rental income, or any other investments be taxed? 
• Should I keep some, any, or all of these investments in the UK, or not?
• What are the most tax-efficient ways to save and take income in France?

If you are able to confidently answer these four questions before leaving, then you are highly likely to be in a very comfortable place on arrival.

Spoiler alert (and the only question I can answer unequivocally): a UK ISA is not recognised in France. The French tax office will simply see through the ISA wrapper, meaning that, as a French tax resident, you should declare tax on the underlying assets via your annual tax return. 

If you are planning to stay in France indefinitely, it is therefore advisable to cash in ISAs tax-free prior to leaving the UK.

Tax planning is never one size fits all. If you are unable to answer the questions above, you may end up sleepwalking into some unpleasant surprises.

Conversely, those with their eyes wide open, with a clear idea, ideally prior to moving, of exactly what their situation will be like on the other side will be able to move with confidence and a free spirit.

To become part of that group may require taking qualified advice from a French regulated adviser, ideally before leaving Blighty.