Moving to France can be one of the most rewarding decisions of your life but for expats, the beauty of life in France can come with a hidden cost:
Financial missteps that are easy to make and expensive to fix.
1. Assuming that France doesn’t want to tax your foreign income and overseas assets
Some expats assume that only their home country taxes their income, until they receive a hefty bill (or fine) from the French tax office. If you are a resident of France, you may have to pay tax on your foreign income. This includes for new residents. You should contact a French tax adviser and check out the double taxation treaty between your country of origin and France. However, some sources of foreign retirement income are exempt from French taxation.
Things to think about:
- Use an accountant to help you with your tax returns, ideally one that is specialised in foreign sources of income.
- If you physically do the work from France then the income from any professional activity can be classed as French sourced, regardless of where your customers are based, where your company is based and where your bank accounts are based. All foreign bank and investment accounts must be declared on your annual French tax return, from year 1.
- The French property wealth tax (impôt sur la fortune immobilière) applies to overseas property after five years of residence and French property from year 1.
- Your children could pay French inheritance tax (droits de succession) on your assets, even if they do not live in France. You should check your tax treaty and with a tax adviser.
- You could have to pay French inheritance tax on any overseas assets that you inherit, especially after six years of residence in France. French inheritance tax rates go up to 45% for children and grandchildren and up to 60% for those who are not closely related to the deceased person.
- You could have to pay income and capital gains tax (typically at 30%) on any overseas investment income, from year 1.
2. Not Checking If You Have the Right to Work Remotely in France
One of the most common mistakes by expats in France is assuming that you can work here remotely without any tax and legal obligations for you and your employer.
Why it matters:
Many long-stay visitor visas do not allow you to conduct paid work, even if it’s for a company based outside France. Working remotely without authorisation can jeopardise your residency status and lead to fines or deportation. A French residency card will typically state whether you can perform any professional activity, employed work, self-employed work or none.
Even if you have the right to work in France, it does not mean that you can work remotely for a foreign company without your foreign employer paying tax and social security contributions to the French state. If working on a long-term basis in France, your employment contract also has to respect French employment laws.
3. Not Using the Most Suitable Investment Accounts
Some investment vehicles that are common and tax-efficient in your home country, like ISAs in the UK, can be taxed in France, even if you do not withdraw any funds from the account.
Mistake: Keeping home-country investment accounts without understanding French tax implications.
Avoid it:
- Review your portfolio with a French regulated investment adviser specialised in expats in France (such as ourselves!)
- Consider France-friendly options like Assurance Vie and Plan Epargne en Actions which offers long-term tax benefits, which we can also arrange.
- Avoid holding foreign mutual funds if you’re a U.S. citizen living in France as they may be classified as PFICs (Passive Foreign Investment Companies) and taxed heavily
- Consider whether your overseas tax-efficient investment accounts are still suitable for you. This may partly depend on whether you plan to live in France for the long-term or one day move back to your country of origin (or elsewhere!).
4. Ignoring French Inheritance Laws
In France, inheritance is governed by Napoleonic Code, which includes forced heirship rules — meaning a portion of your estate must go to your children, regardless of your will.
Mistake: Assuming your home country’s will applies in France and that all of its clauses will be respected.
Avoid it:
- Draft a French-compatible will with a French notary (notaire).
- Foreign wills can be recognised in France if they were correctly written in your home country, but some aspects may not be.
- Trusts are generally not recognised in France law
5. Not Planning for Currency Exchange Risk and Fees
Living in France but receiving income in another currency (like GBP or USD) exposes you to currency volatility. Sometimes, these fluctuations can erode your savings and your income.
Mistake: Ignoring exchange rates when transferring large sums for property, tuition, or retirement.
Avoid it:
- Use specialist foreign exchange (FX) services to ensure that you obtain a competitive rate (we can help you with this)
- Potentially move some of your savings into Euro-based investments and accounts
- Work with an adviser who includes currency planning in your strategy
6. Not Registering with the French Healthcare System
France has a very good public healthcare system, and expats often qualify from year 1 if they follow the right procedures. But many expats in France continue to pay for expensive international insurance, often unnecessarily.
Tips:
- Apply for French social security coverage if eligible. A French employer will do this for you. If you set up as self-employed, you will receive a French social security number (numéro de sécurité sociale) and then a Carte Vitale.
- Add a French mutuelle (top-up insurance) for full coverage
- Apply for an S1 form at state pension age if you have never worked in France.
As French insurance brokers, we can also arrange French healthcare for you.
7. Buying a French Property Without Understanding Your Obligations
France is a great place to buy property, but the process can be very different from other countries and expensive mistakes can be made.
Things to look out for :
- Once you sign a conditional purchase offer, such as a compromis or promesse de vente, you cannot just pull out because you have changed your mind. You can only withdraw your offer if certain conditions are met.
- If you state that you require a mortgage, you must respect the mortgage conditions in the purchase offer. To pull out, you often require refusal letters from banks, which can be hard to get. If things go wrong, you could be asked or forced to pay 10% of the purchase price to the seller, as compensation.
- Aisa International France can guide you throughout the entire French property purchase process and also help you define a budget and estimate how much you could borrow.
Contact Us: How We Can Help You Thrive Financially in France
Navigating finances as an expat in France can be complex, but you don’t have to do it alone.
As a French regulated financial advisory firm specialising in cross-border financial planning for expats in France, we can help you:
- Avoid costly tax and legal pitfalls
- Optimise your investments and currency strategy
- Ensure your retirement income is tax-efficient and sustainable
- Obtain French insurance policies
- Plan French property purchases
- Provide general financial planning and wealth management services
Contact us at support@aisainternational.fr for a no-obligation consultation to see how we can help protect and grow your wealth while you enjoy your life in France.
