Britons with vacation houses in France deal with paying extra 10 % in tax if they sell the property following a Brexit
Britons with vacation homes in France could wind up paying an additional 10 percent in tax if they sell the property following a Brexit, specialists have warned.
They recommended that Britain overseas property purchasers have actually been secured from paying service charges that apply to non-EU people. These consist of substantially higher capital gains tax charges on offering properties in France.
Jason Porter, of wealth supervisors Blevins Franks, alerted: 'Britons who own a property or who are thinking about purchasing a holiday home in the EU possibly do not realize the extra tax charges that could emerge as an outcome of a Brexit.
'In an attempt to create a level playing field across European nations, the European Court of Justice has actually imposed judgments against certain states it thought were enforcing inequitable taxes on non-residents as compared to homeowners, or where a tax did not adhere to the fundamentals of the EU.
'For example, it just recently prevented France from enforcing a 15.5 per cent social charge on rental income on non-residents in the EU, on the basis the EU requires social security needs to only be payable in one state in the EU. This judgment does not apply to non-EU states.
'People need to be aware of the taxes they could wind up paying on property if Britain leaves the EU. The benefit of these judgments, might be lost if the UK left the EU.'.
A Brexit implies that a British citizen who buys a 500,000 vacation home in France might wind up paying 48.5 percent in tax on offering the property rather than 39.5 percent if Britain votes to remain in the EU.
They will initially have to pay tax in France, which they can balance out when it comes to then paying tax in the UK.
In France, the charges consist of capital gains tax of 19 per cent, an additional charge of approximately 6 per cent and social charges of approximately 15.5 per cent, which equates to a maximum of 36.5 percent. The French capital gains tax and surcharge paid can be set off versus the tax due in the UK at up to 28 percent (French social charges cannot be off set), which means an optimum additional amount of 3 per cent is payable in the UK. It means the most you will pay in total in between the 2 nations is 39.5 per cent.
However, if Britain leaves the EU, then you would pay capital gains tax of 33.3 percent, and social charges of as much as 15.5 per cent in France - a total of 48.5 percent, almost 10 per cent more than if Britain stays in the EU.
A vote for Brexit on June 23 will not be end of the story for UK property investment in places such as Austria, says Mark Warner Property's Giles Gale.
He stated: 'Under the Lisbon Treaty there is most likely to be a duration of up to a two years before the UK actually leaves the EU. This is likely to lead to a rush from purchasers who will want to complete on their purchase before the UK formally leaves.'