New Fiscal Changes Brought in by Nicholas Sarkozy
By Anne Ivers*

Since his election as President of France, Nicholas Sarkozy has implemented a number of changes, and not only a change of First Lady! Only a couple of months after divorcing from Cecilia Sarkozy, who became France’s First Lady at the time of the Election results, he swiftly replaced her with Carlo Bruni, an ex top model. Since marrying Carla Bruni, his popularity rating has plummeted, it seems the French think he should be concentrating on more important matters of State than his love life. It would seem that the French prefer that their president keeps his wife and takes a mistress, as did Francois Mitterrand!
Although the French are not happy with their President, those who are considering a move to France but have to date been dissuaded by the onerous fiscal regime of France’s Inheritance laws has rather more to be pleased about. Previously, under the French tax system, lifetime gifts and inheritance between spouses was taxed heavily. The taxed spouse could only benefit from a tiny tax free allowance of 76,000 euros. Sarkozy kept his promise and when elected into office he abolished inheritance tax for the surviving spouse, which means that there will now be no inheritance tax payable by the surviving spouse on the estate of a deceased husband or wife. Lifetime gifts, however, are still subject to tax, and the threshold of 76,000 euros applies.
There have also been fiscal changes regarding a children’s allowance upon the death of a parent. A child can now inherit up to 150,000 with no tax liability.
France imposes tax liability on a resident’s global income, and Sarkozy has brought in some interesting changes for those living in France but have sources of income elsewhere. The maximum amount of direct tax is now 50% of worldwide income, rather than 60% as it was before Sarkozy’s election. There have also been changes to France’s famous wealth tax. In the calculation of wealth tax, there was previously a discount of 20% in proportion to the value of your main residence in France, this has now been increased to 30%, which is good news for those who are liable to pay wealth tax in France. Nicholas Sarkozy has promised to implement more changes such as the above, so watch this space!

*Anne Ivers is a British writer living between France and the UK. She previously worked as a lawyer, in the UK. Ms Ivers is the author of the book “Living and investing in France” published by ExpatsEbooks.com