Inheritance and taxes?

[Amandine.K]

Hi!

Well here is the case. I am currently on a fixed term contract til June. I will not be renewed as I am expecting a baby for end of July.

My father, who lives in France, has sold his house and I am getting a share of it (part of my mother's share as she passed away 9 years ago).

The money will be transfered to my bank account end of June/early July from the notary in France.

Any of you knows how it works? Will the money be taxable? In that case should I ask for a new Vero card taking into account the amount I will get?

Also due to the fact it's a rather large amount am I going to pay fees from the bank for the money transfer?

Thanks a lot

Amandine

[Rosamunda]

If you officially inherited the money before you moved to Finland and declared it in France then no, you will not be liable here on the inheritance but you will need to show the paperwork. However, if you officially became part owner of your father's house (sounds like this could be the case) then you will be liable for tax on the added value (capital gain) between the date you acquired it (when you inherited it) and today's selling price. Now, I do not know whether that tax is liable in France or Finland or both. It is a very complicated situation since the house was your father's principal residence but not yours as you are domiciled fiscally in Finland. Do the French tax authorities have you down as a non-resident? (do you send a tax return to Quai des Uzès ?) It is possible to get info by email from the CDI des Non-Résidents, they do reply.

The French authorities will inform the Finnish authorities, I am pretty sure of that. When we sold our house in France (we were renting it out and sold it in 2002) the Finnish authorities contacted us to ask for information about the sale after we had transferred the money to Finland. It took Vero several months to get in touch but they definitely knew about the transaction. It could've been the bank who told them, not sure.

There is a threshold for cross-border money transfers in the Euro zone before you have to pay charges. But you will probably go over that. You need to get a quote from your bank in France and from your bank here. Try and negotiate a deal. We were buying a house here so our bank dealt with the whole thing and didn't rip us off, but that was several years ago.

I think you will have to go into Vero and talk to someone about your situation. Take ALL the paperwork with you. It is quite complicated so I doubt if anyone on here can answer you and I doubt if you will get a satisfactory answer over the phone as they will need to see the documentation. Worst case scenario is if the Vero assume the whole sum is a gift.... then you get clobbered 16% (if I remember correctly) on everything over 3000 euro (but that tax-free limit was supposed to increase to 30K, not sure when though).

Did you try http://www.sudfinlande.net there is a possibility someone on there has been through a similar process.

[Amandine.K]

Hi Peneloppe,

It is indeed ery complicated. I have no paperwork whatsoever! My mum died before I left France so I became owner of about 20% of the house then. We had papers done at the notary so I guess I can have a copy of that if I ask. The presale on the other hand took place a few weeks ago and will be effective on June 30st this year. I didn't attend the signing, I gave my dad the rights to sell the house for me (une procuration?).

I am registered in Finland and haven't been a French resident for about 6 years now. I don't pay taxes in France.

I know that I pay something in France which is deducted from the total amount I'm getting but that's due to the fact that we are selling the house before the 10 years-delay imposed by French legislation. My dad on the other hand doesn't pay anything as he's owned the house for over 20 years.

As for money transfer the notary is arranging it on the French side as I don't have a bank account there anymore. I am with Osuuspankki so I should check that out then.

Argh I was sure this was going to be complicated but my husband thought it would be so straight forward, that it will be tax-free here as it's an inheritance.

Thanks for your advise anyway, I'm going to get in touch with Vero and my notary to get the most accurate infos.

[Hank W.]

I think you must be adamant it "being inheritance"... The notary paper of "times back when" is the key here. In Finland it is not unknown that an estate stays undivided...

Oh, and inheritance/gift whatever tax hasn't got anything to do with your income tax withrawal %. Separate moneys.

[Rosamunda]

I don't think the Finnish system will treat it as inheritance because AmandineK was not fiscally resident in Finland when she inherited her share of the house (as in here: http://www.vero.fi/nc/doc/download.asp?id=2142;56124). I think the Finnish authorities will tax it as a capital gain. This will be calculated on the difference between the "purchase price" (ie it's estimated value at the time of inheritance) and it's selling price today. Adjustments are made for inflation and probably for any repairs / improvements that you may have financed (if you have the receipts). You can probably also deduct all the notarial fees, the bank charges and anything else you can think of. If she pays any tax in France - and it sounds like there will be "une taxe sur les plus values" (capital gains tax) due to the 10 year rule - then this will be deductible from tax due in Finland (under EU rules she should be able to avoid double taxation, even if she is taxed in both countries, if you see what I mean).

So, I agree with Hank that it is important to get copies of all the French paperwork, and your quittus fiscal and anything else you can find, BUT I do not think that it will be taxed as an inheritance.

From Vero (in the glossary under "selling your home"

Selling your home
If you sell your principal place of residence where you have lived for two years or longer, and make a profit (called a capital gain ) you need not pay tax. But if you used the house, flat, condominium or apartment for other purposes, or if you lived in it for a shorter time, you have a taxable capital income, assessed at the 28-percent capital tax rate.
* Selling your home
* Taxation of capital gains
(the links were corrupt...)


It is possible.... that once you have cleared the transaction in France and paid any tax due there (not sure how this works for a non-resident), there will be very little extra to pay in Finland, if any. OTOH France might not tax you at all, and just notify the Finnish authorities.

In our case we were selling our "residence principale" in France to buy a house here and I think there was something in the French rules along the lines of... capital gains tax is not levied on the revenue from the sale of your home provided you have occupied it continuously for x number of days in the x number of years preceeding the sale of the property. Anyway , on paper, the capital gain on the house would have been close to zero since we had only owned it for 6 years and our interest repayments on the mortgage ate up any the capital gain (btw interest payments are deductible, so are improvements and some fixtures and fittings and also labour costs - even if you do the work yourself ).