Moving from US to France via a FY in the UK

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Topic Author
rjm_cali
Posts: 111
Joined: Thu Apr 10, 2014 1:52 pm

Moving from US to France via a FY in the UK

Post by rjm_cali »

We're retiring next year and initially planning a move from the US to the UK spending a FY there before moving to France. We may end up being financially resident in the UK for upto two FY.

At the same time that we move to the UK we will have liquid assets we would like to invest - ideally for the long term. It occurs to me that we could simply open a Vanguard account in the UK - make the investments and just leave them there rather than say open an IB UK account in the UK and move it to IB FR at a later date. One of the reasons is that I trust Vanguard to handle a big chunk of our assets in a way that I wouldn't trust another brokerage. I know I'd end up splitting the assets up.

I guess my question is - what are the risks if any of maintaining my account in Vanguard UK ? I know they don't operate in France so is VG UK likely to complain if I move to FR.

The reason for my sort of interest in VG UK is that we will elect in our estate planning to have UK law settle our estate.

N.B Please presume that my partner and I will have successfully extricated ourselves from the US citizenship tax (over) reach before placing any investments in Europe.
Valuethinker
Posts: 42763
Joined: Fri May 11, 2007 11:07 am

Re: Moving from US to France via a FY in the UK

Post by Valuethinker »

rjm_cali wrote: Wed Jun 16, 2021 5:58 pm We're retiring next year and initially planning a move from the US to the UK spending a FY there before moving to France. We may end up being financially resident in the UK for upto two FY.

At the same time that we move to the UK we will have liquid assets we would like to invest - ideally for the long term. It occurs to me that we could simply open a Vanguard account in the UK - make the investments and just leave them there rather than say open an IB UK account in the UK and move it to IB FR at a later date. One of the reasons is that I trust Vanguard to handle a big chunk of our assets in a way that I wouldn't trust another brokerage. I know I'd end up splitting the assets up.

I guess my question is - what are the risks if any of maintaining my account in Vanguard UK ? I know they don't operate in France so is VG UK likely to complain if I move to FR.

The reason for my sort of interest in VG UK is that we will elect in our estate planning to have UK law settle our estate.

N.B Please presume that my partner and I will have successfully extricated ourselves from the US citizenship tax (over) reach before placing any investments in Europe.
Yes re IB as long as you buy Irish domiciled investments (or Luxembourg). Otherwise you are right, you are going to have to open VG in UK, then transfer assets out again when you leave.

First £2k dividends is tax free.

(I am assuming you have sorted out your UK visa requirements, which have become fiendish in the post Brexit world. Note that having UK citizenship for one of you, doesn't necessarily help the other - that's become a real issue as Brexit has set in fully).

You can open a UK ISA (£20k pa x 2 per FY*) and that will shelter you against UK taxes BUT you will probably just have to close those when you leave due to French rules.

You may find you need to liquidate investments before you leave the UK and rebuy them once resident in France - to set a new cost basis for capital gains.

*if you know you are going to be there for 2 FYs, then you can open one for the current FY (that you are UK resident) before 5th April, and then another on 6th April for the next tax year. Thus fully sheltering all gains and income for the whole £80k for the rest of your time in UK.
Topic Author
rjm_cali
Posts: 111
Joined: Thu Apr 10, 2014 1:52 pm

Re: Moving from US to France via a FY in the UK

Post by rjm_cali »

Valuethinker wrote: Thu Jun 17, 2021 12:59 am

Yes re IB as long as you buy Irish domiciled investments (or Luxembourg). Otherwise you are right, you are going to have to open VG in UK, then transfer assets out again when you leave.
Yeh - thinking it through it seems like the only/best thing do is straight off use an IBR account and just move country of residence as needed. I'm a US LTR / UK Citizen and my wife is UK/ naturalized US so we're OK on entry to the UK. I'll miss Vanguard but will probably end up buying their Irish ETFs.

First challenge assuming we can extricate ourselves successfully from US Federal and state taxation (thank you CA) is re-establishing tax residency in the UK.

Appreciate your thoughts. Getting my head around three country tax and immigration rules is not for the faint hearted. No shortage of US/UK or UK/EU advisors - but they seem to run a mile when you mention US/UK/EU..
Valuethinker
Posts: 42763
Joined: Fri May 11, 2007 11:07 am

Re: Moving from US to France via a FY in the UK

Post by Valuethinker »

rjm_cali wrote: Thu Jun 17, 2021 10:22 am
Valuethinker wrote: Thu Jun 17, 2021 12:59 am

Yes re IB as long as you buy Irish domiciled investments (or Luxembourg). Otherwise you are right, you are going to have to open VG in UK, then transfer assets out again when you leave.
Yeh - thinking it through it seems like the only/best thing do is straight off use an IBR account and just move country of residence as needed. I'm a US LTR / UK Citizen and my wife is UK/ naturalized US so we're OK on entry to the UK. I'll miss Vanguard but will probably end up buying their Irish ETFs.

First challenge assuming we can extricate ourselves successfully from US Federal and state taxation (thank you CA) is re-establishing tax residency in the UK.

Appreciate your thoughts. Getting my head around three country tax and immigration rules is not for the faint hearted. No shortage of US/UK or UK/EU advisors - but they seem to run a mile when you mention US/UK/EU..
If you were born in the UK it will be almost impossible to claim non domiciliary status although it is worth checking the rules. In that situation you keep your money offshore and don't incur UK tax on your investments.

There are discussions here about France and French investment taxation (which sound brutal). Worth searching.

The good news is French healthcare is said to be much better than British. The bad news is that if you haven't paid into the system in your working life, they naturally expect you to have some form of insurance in retirement - at least as I understand it.

Anywhere outside Ile de France the cost of housing should be much much cheaper than England (southern England, anyways).

Sounds like you have it sorted on platform. Because of the dangers of a platform saying "Oh, we didn't realise you were American. We are closing your account" I would probably have at least 2 platforms for safety. Same for bank accounts (or separate between you and spouse).

I am not sure what the French rules are on offshore accounts (more research!) but if they are Channel Islands accounts you should be OK (or Luxembourg might be safer given our various contretemps with EU right now over Northern Ireland). As long as there is no intention to fail to report (all European entities share data, now, with the relevant tax authorities - at least AFAIK).

Maybe open IB accounts in UK and Offshore at same time?
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