Brexit rules ‘will cost us an additional € 150,000 in taxes to sell our second home’
A Report The reader faces a higher-than-expected capital gains tax bill of € 150,000 after the sale of their second home – as stricter non-EU rules apply after Brexit.
Since Brexit, British residents who sell French property must call on a tax representative for capital gains formalities if the sale is greater than € 150,000 – the same as for all third countries.
The expert assumes legal responsibility for the correct payment of the tax.
This saves the tax office from having to search for invoices from sellers around the world in areas without coordinated rules on mutual application of laws that exist between states in the EU.
This means that representatives are often scrupulous about tax rules, as Nigel St George, 69, a retired IT company owner from Surrey, found out after selling the house he built in 2004-05 on the island of Ré.
He said he was shocked to be asked for his bank statements from the time all the merchant bills had been paid.
Invoices and check stubs were not accepted, despite official advice from the French government to members of the public to keep them for five years.
He did not have the statements and his French bank could not provide them until 2011, when they were scanned.
“I wrote to our MP about this and he wrote to the British Embassy. It’s incredible. Among our French friends, no one can believe it.
“However, we have heard many Brits say the same, now we have left the EU.
“The lawyer would have taken care of it before, and ours has known us and the property since day one.” The tax representative checks the boxes.
“He doesn’t know us or the building. I said it was like you said the building had no value – and he said, “I’m going to have to put in $ 1 to run the calculator.” Mr. St George said he calculated a gain of € 120,000 using his bills.
The representative is only prepared to accept part of the invoices, giving a tax invoice estimated at € 180,000.
In addition to this, he added a 50% guarantee sum of € 90,000, to be kept by a third party for three years in the event of a request from the tax authorities.
The representative could not confirm how the money would be refunded, Mr St George said, suggesting he may have to go to court, which would incur additional charges.
He said he was careful to follow the advice he received when building the house, keeping all invoices and only using local, not foreign, businesses.
He plans to change representative but fears that the rules applied may not be the same.
The connection spoke with a tax representative, Isabelle Chanavat of the Société accrédée de représentation fiscal (Sarf) in Paris, who confirmed that asking for bank statements was the norm.
A very large guarantee may be required in their absence, taking into account the possibility that the tax administration will not accept any of the invoices, which means that the gain is calculated minus the works (in this case on a building plot), and that it can impose heavy penalties.
She said, however, that there was no reason for the money not to be returned after three years, the usual period for petitions.
She couldn’t say why the representative had given a higher capital gain estimate than Mr. St George considers appropriate, but said that may have been because not all types of work are eligible.
She confirmed that using foreign companies is often problematic, as invoices may not contain all the information required by French law. They must be translated and there must be proof that French VAT has been paid.
English-speaking notary François Trémosa, of Trémosa-Leschelle & Associés in Ramonville-Saint-Agne, Haute-Garonne, said: “After three years the money should be returned to the seller. He does not have to ask for it – the notary has to take care of it.
He added that he generally advises all clients who buy a property to keep old bank statements in the event of tax, divorce or inheritance issues.
He was “not surprised” if representatives asked for them as “if there is a problem, it is the representative who is liable to the tax office ”