French Property Capital Gains Tax for UK Residents: What You Need to Know

If you’re a UK tax resident selling French property, it’s important to understand how both French and UK tax systems interact when you make a profit on the sale. Because of international tax rules and the France-UK Double Taxation Convention, you may owe tax in both countries, but you generally won’t be taxed twice on the same gain. 

Here’s a clear, step-by-step overview of how capital gains on French real estate are treated for UK residents, how to calculate your obligations, and what reporting requirements you need to meet in each jurisdiction. 

1. Where Capital Gains Tax Is Due

Under the France-UK tax treaty, capital gains arising from the sale of immovable property (like real estate) are taxable in the country where the property is located, in this case, France. 

For UK residents, this means:

• France has the right to tax the gain on French property at the time of sale. 
• The UK also taxes your worldwide gains and you must report the gain in your UK tax return. However, the tax paid in France can reduce your UK tax bill. 

This mechanism ensures you are not doubly taxed on the same profit, you receive a credit in the UK for the tax you’ve already paid in France (subject to certain limits). 

 

2. How Capital Gains Tax Is Calculated in France

In France, the taxable gain is the difference between what you originally paid for the property and the net amount you receive on sale, after allowable expenses and deductions. 

Key elements of the French calculation include:

• Sale price minus purchase price
• Deductible costs, such as notary and agency fees
• Renovation and improvement costs if documented
• Allowances based on length of ownership

France applies taper relief based on how long you have owned the property, this can reduce the amount of gain that is taxable. For example: 

• Income tax portion (19%) gradually reduces the taxable gain after 5 years of ownership and becomes exempt after 22 years. 
• Social charges may be reduced as ownership gets longer and can eventually be exempt after 30 years. 

Note that social charges for non-residents, including UK residents, are typically applied at a rate of 7.5% (solidarity levy) rather than the full 17.2% because of social security agreements. 

3. What Happens in the UK

After you’ve paid French tax on the gain, you must also report the sale to HM Revenue & Customs (HMRC) in the UK. 

Reporting and Tax Offset

UK tax rules require you to:

• Declare the gain on your UK self-assessment tax return
• Pay UK capital gains tax (CGT) on the gain, subject to UK rates and allowances
• Offset the French tax already paid against your UK CGT liability 

However, there are two important points:

1. The French tax credit cannot exceed your UK tax bill.
   If the French tax paid is higher than what you would owe in the UK, you don’t receive a refund for the excess, it is simply not credited beyond the UK tax value. 
2. You must meet UK reporting deadlines.

For property sales, this typically means:

• Within 60 days of the sale: notify HMRC of the gain
• By the UK tax year deadline: include it in your self-assessment return 

Failing to report or pay on time can result in penalties and interest charges. 

 

4. Practical Implications of Double Taxation Relief

The key benefit of the double taxation treaty between France and the UK is that it avoids you paying full tax in both countries on the same gain. 

Here’s how it works in practice:

1. Sell the French property and calculate the gain. 
2. Pay the French capital gains tax and any applicable levies at the time of sale. 
3. Report the gain to HMRC and calculate your UK CTG liability. 
4. Claim a tax credit in the UK for the French tax already paid. 

If the French tax bill is greater than the UK tax due, the UK tax may be reduced to zero, but you won’t get a refund for the surplus French tax.

 

5. Key Compliance Steps for UK Residents

To stay compliant and optimize your tax position:

• Appoint a French fiscal representative if required (especially when selling property worth more than €150,000). 
• Keep detailed documentation of acquisition costs, improvements, and sale expenses.
• Report the French gain to HMRC within the relevant timelines and include it in your UK tax return.
• Understand UK reliefs and allowances, including the annual CGT exemption and appropriate tax rates. 

Considering the complexity of two tax systems and international agreements, seeking advice from tax specialists experienced in both French and UK regimes is strongly recommended.