Retiring to France: how to navigate the wealth tax and ‘forced heirship’ inheritance rules

France has an answer to most retirement dreams, from the Mediterranean coast for sun seekers, the Alps for mountain lovers or small provincial towns for those seeking a “campagnard” lifestyle.

More than 66,000 British pensioners have already upped sticks and moved across the Channel. It may be enticing to sell up and relocate to join them, but any move abroad must be carefully planned.

Brexit has made it more administratively demanding and marginally more expensive to make the move, but it is still entirely possible with some forward planning.

Here, Telegraph Money sets out everything you need to know about relocating to France, from taxes and visas to pensions.

How much money you need to retire to France

If you are retiring to France, you will need a visa that proves you have a minimum level of income – this can be supplemented with savings and investments you can draw on. 

British arrivals must have an income equivalent to the French minimum wage, which on January 1, 2023, amounted to €1,709 (£1,486) per month, or €20,511 per year.

The national minimum wage, or “smic”, in France falls to €16,236 per year after social insurance charges are deducted. 

And, while the strict rules for a couple are double these amounts, the French consulate in London has said it will use a figure of roughly €2,000 per month and €24,000 per year.

If you receive the British full new state pension, worth £10,600, or €12,190, per year, it means you must make up the remaining €4,046 from other sources as a single person. If a married couple both receive the full new state pension, there would be no additional income required.

Getting the right to move: sort out your visa 

There is no specific visa for retirees. Instead, you’ll fall under the “economically inactive” section of the long stay visa, the “VLTS-TS Visiteur visa”, designed for those who plan to live off pension income, investments, savings and capital.

You will need to show you can fulfil the requirements for health insurance coverage in France as part of your application. 

If you are under the British state pension age, currently 66, you may have to purchase a private medical policy at the outset, and then after three months you can buy into the French healthcare system under a special scheme called PUMa (Protection Universelle Maladie).

You can also apply for a form S1 from the UK NHS Overseas Healthcare Services. You register this at your local French CPAM office, to allow you and your dependents to get healthcare coverage in France on the same basis as a French citizen.

You will still have to pay part of your medical costs (generally 20pc-30pc), just like the French, which you can choose to cover with a supplementary health insurance plan called a Mutuelle.

After five years of living in France, Brits can apply for permanent residency – the “carte de résident de longue durée” – which is valid for 10 years and also gives you the right to work in the country. 

How French tax works 

Anyone planning their move must consider their financial and tax situation before they relocate, or risk facing hefty bills.

British tax-efficient investments, such as Isas and money won from NS&I’s Premium Bonds, do not have the same tax-efficient treatment abroad. 

In France, any interest, dividends or capital gains arising within these accounts will be taxable as though you owned the underlying investments directly. 

Anyone thinking of moving to France might want to think about cashing-in these investments before leaving. 

Jason Porter, of the financial adviser Blevin Franks, said: “Most British expatriates will sell their UK home when they move to France, which means no capital gains tax and social charges should be due in either country, according to the main home reliefs available in both jurisdictions.” 

Your pension income will be taxed in France, unless you have a UK Government pension, in which case it will be taxed by HMRC. 

Importantly, the 25pc tax-free pension lump sum rule does not apply in France, so you may want to cash in before you move. 

You will also be taxed on any worldwide income, including any interest incurred on bank account savings, even if it is not actively used. 

Everyone must declare their bank accounts to the French tax authorities, and failing to do so can incur a fine of up to €10,000 per undeclared account.

France also has a wealth tax, which applies to properties worth more than €1.3m. Where tax is due, the first €800,000 is tax-free, and then it is charged at a rate of 0.5pc on assets up to €1.3m in value. This rises to a maximum of 1.5pc on property worth more than €10m.

You will only be liable on the value of your French real estate for the first five years you live in the country – after that point, it includes all property owned worldwide. 

Inheritance and “forced heirship” in France

Strict inheritance tax rules in France could inadvertently result in money going to the wrong family members. 

Under French law children, whether from a current or previous relationship, are classified as “reserved heirs”, which means they are entitled to up to 75pc of the deceased’s estate. This rule, often known as forced heirship, even supersedes the current spouse. 

One child is automatically entitled to 50pc of the parent’s estate, two children receive two-thirds and three or more get 75pc of the estate in equal shares.

“This can be a particular issue for people who have children from an earlier relationship, or for those who wanted their spouse to inherit all their assets on their death,” Mr Porter said.

There may be a way around this. European succession regulations allow people to elect for the inheritance rules of the country of their nationality to apply in their will. This means you can stick to UK inheritance tax rules, as long as you request it in your will. 

However, the French are trying to preserve their own rules. In August 2021, France introduced laws to preserve its Napoleonic code and protect the bloodline. 

It means that a will, even a foreign one, will be ignored if it attempts to override reserved heirship rights.

Mr Porter said: “The protected heirs – both biological and adopted – can make a claim for the share they would be entitled to under the French rules, allowing children to challenge the parent’s will and seek compensation, though the compensation mechanism only applies to French assets.

“This new legislation would appear to override the European succession regulations and it is highly likely it will be challenged in the European Courts. Until the courts have opined, French residents must observe these new French laws and plan accordingly.” 

Buying French property

French property is cheaper than buying a house in England, on average. The national average house value was €284,294 (£244,509) in France at the start of 2021, compared to £262,087 in Britain, according to Knight Frank, an estate agent.

The most expensive region in France was Auvergne Rhône-Alpes, which had an average house value of €438,316, while the cheapest houses were in Normandie at €205,099.