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Crisis not taxes pushing French to go abroad

There has been much publicity in recent months about French people quitting their native country in search of happier financial climes, but are they really leaving to avoid high taxes and a rigid labour market?

Crisis not taxes pushing French to go abroad

Thanks in no small part to Gérard Depardieu we have been given the impression in recent months that the notorious French tax man is encouraging thousands to up sticks and say 'adieu' to France.

President François Hollande’s proposed flagship 75 percent tax, the highest levels of unemployment since 1997 and an inflexible labour market are offered up as ready-made excuses for the supposed mass exodus.

But are boats in French ports and planes at Charles de Gaulle airport really full of people desperate to leave to be able to make more money and pay less taxes abroad?

“No, this is a myth,” claims Fabienne Petit director of international activities at French firm Humanis, which works with French expatriates in the area of health cover and insurance.

“It’s a real cliché to say that all French people are going abroad for only fiscal reasons. In fact only 17 percent of people leave for financial reasons, so we need to put an end to this myth,” Petit told The Local.

Neither does Petit believe that people leave because of the renowned inflexibility of the French labour market, where permanent jobs are hard to come by.

“The labour market in France is not very flexible for businesses but there is more protection for workers. If they go abroad it’s not because of the French employment system. If you have a CDI (permanent contract) in France then it can be very beneficial.”

However the is no doubt that more and more French are heading to the exits. The number of French people leaving to go abroad increases by 4 percent each year and has jumped 60 percent since 2000.

Petit has noticed however that the on-going financial crisis is pushing people to abroad sooner than they might. Whereas in the past French people would be more likely to leave if they had a job lined up, they are now landing in countries with nothing but their luggage and an open mind.

With the financial crisis squeezing the French economy the number of young people leaving to go abroad has increased by 20 percent.

“Most French people leave for professional motives. They leave because they have an opportunity in their career or for cultural enrichment, possibly to discover another country,” Petit added.

“Many young people go abroad to study believing it will help them find a job or to gain experience that will help them advance in their profession.”

That view is backed by a recent Ifop poll that revealed 27 percent of young graduates see themselves building a career abroad instead of in France.

Retirees leaving for cheaper cost of living

But of the 2.5 million French people living abroad, most have left because they made a “life-choice”, Petit said. But it is not just those with careers in mind who have been forced to leave.

“With the ongoing crisis we have seen a 10 percent acceleration in the number of retired French people moving abroad,” Petit said. “Many older people have difficulties affording to live in France so they leave to go to places like Morocco, where they will have not only the sun but a cheaper cost of living.”

When they leave France, most French expats don’t go far. According to figures from the “Maison des Français de l’etranger” (centre for the French abroad) 50 percent go to other countries in Western Europe.

Of the rest, 13 percent go to North America, 14 percent to Africa, 6 percent to South America and 7 percent to Asia and Oceania, although that number is increasing with the strength of the economies in those regions.

One in two leave with no health cover

But it is not all sweetness and light for the departing hordes. France may have the disadvantage of the highest unemployment levels since 1997 and an economy that is struggling to splutter back to life but there are benefits that many French come to regret leaving behind.

 “A lot of people who leave don’t realize they will not have the same social protection that they had in France. It can be very expensive to have the same kind of healthcare that they had here,” Petit said.

“Their salary might be on average 20 percent higher abroad, but they have to pay a lot of that on getting healthcare and insurance etc so in the end it’s not really worth it.

According to a study by Humanis, one in two expats leave France without health cover and 17 percent end up living abroad without any protection.

“There was a case of a French woman in Thailand with four children. Her husband died and she had nothing. There are also cases of people developing cancer abroad and they want to return but they don’t have cover here either for the first six months.”

Why did you leave?

The Local spoke to two French natives who both quit their country to go abroad for slightly different reasons.

Vincent Le Coz, Nantes, who lives in Rome:

“For me Paris was simply too expensive. For the same salary in Italy I have a much better standard of living. Life is easier here and I am away from the French who self-denigrate all the time.

“Plus I have always been attracted to foreign countries and languages. It has always been an ambition of mine to live abroad.”

Emilie Lopes, Paris, who lives in London:

“I left France to see the world, to experience other cultures and other ways of thinking. I also left to learn English because the teaching of languages in France is not so good.

“It would be easier to return for professional reasons and I miss the lifestyle in France. But I don’t like the French mentality. They complain all the time despite the benefits we have. I will probably come back one day, but not now.”

Lou Garçon, Paris, who has returned after studying in London:

"For me it was simple: I just wanted to get out of France. It was also the climax of the economic crisis which scared me a lot. The atmosphere was tense with Sarkozy as a president and I was ashamed of the way we treated immigrants and how the government spoke about Muslims.
 
“I did not picture myself making a life here in France. France had always felt a bit closed-minded to me. As a French person in the UK you feel as if you can be anyone, apply for any job and meet all sorts of people. I also had the feeling that I needed to leave France to better appreciate it.
 
“Now I have moved back and it's a big relief that the political situation is different. I like how French people are always so responsive to everything, on the edge most of the time, but at least they communicate with each other, whereas British people can be so shy sometimes.”

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TAXES

Explained: France’s exit tax

Planning on leaving France? You may, depending on your circumstances, be charged the 'exit tax'.

Explained: France's exit tax

Like some other European countries, France does have an exit tax for those (French or foreign) who are leaving the country. It’s known by the English name l’Exit tax.

However, it won’t affect most people.

Only those who have been tax resident for a minimum six years of the 10 years immediately before they permanently move out of the country are liable to pay an exit tax – if, that is, they own property, titles or rights worth a minimum of €800,000, or that represent 50 percent of a company’s social profits.

If that affects you, the best advice is to seek expert individual financial advice before moving out of France for good. The relevant page on the French government’s impot.gouv.fr website says it is possible to defer payments, and some relief is available.

Because of the relatively high figures involved, this tax is irrelevant for most people. That said, however, you will still have to inform tax authorities that you are moving out of the country because you may still have income, property and capital gains taxes to pay.

Income tax

You must inform the tax office that you are moving and give them your new address so that your tax declarations can be transferred to your new address.

You are liable for tax on everything you earned in France prior to your departure as well as on any French earnings that are taxable in France under international tax treaties that you earned after your departure.

The year of your departure, you declare your previous year’s earnings as normal – declarations in spring 2024 are for earnings in 2023.

A year later, you will have to declare any earnings taxable in France from January 1st up to the date of your departure, and any French-sourced income taxable source until December 31st of the year of your departure.

If you continue to have any French-sourced income – such as from renting out a French property – you will have to declare that income annually, using the non-residents declaration form.

Property taxes

You will have property taxes to pay if you own a French property on January 1st of any given year – whether it is occupied or not. 

Property tax bills come out in the autumn, but they refer to the situation on January 1st of that year, so even if you sell your property you will usually have the pay a final property tax bill the following year.

Moreover, if you receive income from property in France or have rights related to that property (such as shared ownership or stock in property companies), as well as any additional revenue connected to the property, during the year you leave France, you will be required to pay taxes on these earnings.

If any property assets in France exceed €1.3 million on January 1st of a given year, you may also have to pay the wealth tax (IFI).

READ ALSO What is France’s wealth tax and who pays it?

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Capital gains tax 

If you sell your French property or share of a French property, you may be liable for capital gains tax at a rate of 19 percent. It will also be subject to social security contributions at the overall rate of 17.2 percent.

Capital gains tax varies depending on how long you have owned the property and whether it was a second home or your main residence.

READ ALSO How much capital gains tax will I have to pay if I sell my French property?

The good news is, if you move to another EU country, or any country that has a specific tax agreement with France, you may be exempt from capital gains tax for non-resident sellers on the sale of a property that was your principal residence in France.

If you move elsewhere, you may be able to claim exemption on capital gains tax up to €150,000. As always, you should seek expert financial advice.

Tell Social Security

Inform social security that you are leaving France permanently – and return your carte vitale if you have one. If you do not, you may be liable for any benefits you receive to which you are no longer entitled.

More mundane tasks involve informing utility and water companies, your internet provider, if you have one, the phone company, your insurance companies, banks – and La Poste, who will be able to forward your mail for up to 12 months, for a fee…

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