Tax expert warns local French property owners of double taxation risks

A local French tax expert is reminding islanders who own French properties to be aware of the financial risks, as May heralds the middle of the country’s tax season.

Virginie Deflassieux, French Tax Director at BDO Guernsey, is warning those with vested interests in France, particularly those who own properties, to remember that there is no formal tax treaty between France and Jersey, leading to a variety of potentially costly pitfalls.

“Islanders who own French property and use it as a holiday home won’t usually have to submit a return, but those who rent out their property directly or via rental platforms must report their French rental income in France. Unlike with the UK, the absence of a treaty between the islands and France makes double taxation a very real and sometimes expensive possibility”, Virginie said.

Wealth tax is also a consideration, as France remains one of few countries to enforce it albeit on real estate assets only, including any owned indirectly. “Any owner of more than €1.3m worth of property in France must submit a wealth tax return, regardless of whether they rent their properties out or not”, noted Virginie. This may catch out islanders who assume they don’t have to file a return as they simply use their property as a holiday home. If it’s valued highly enough, however, or if the multiple properties they own mean the wealth tax threshold is surpassed, the French tax authority will come looking to collect.

Along with property considerations, Virginie is also reminding islanders to be cautious of where they conduct their employment. The location of an islander’s ‘main professional interest’ can also make them liable for French tax on worldwide basis. “A Jersey-based freelancer with one French client may be treated as employed by that client in the eyes of the French tax authority.

“Equally, one must be careful when working for a Channel Island-based company whilst living in France. Spending prolonged periods and working from the country can alert the French tax authority and spell disaster for both the employee and employer as the tax and social security authorities can assess cases in arrears for up to six years. In the worst case, this could result in the employee in France being pursued for both the employee and employer’s social contributions.”

Virginie concluded by advising locals with business interests in France to get in touch with a French tax expert, such as her team at BDO Guernsey.

“Our team of experts are always on hand to help islanders plan in advance. The minute you step foot on French soil it is often too late as your interests are in the crosshairs of the French tax authority. We can help plan in advance to mitigate any issues and we can also assist in bringing French tax filing up to date. Email [email protected] to find out more.”