Civil partnerships in France

Since December 2005 it has been possible for two people to enter into a 'pacte civile de solidarité' in France, governed by article 515-1 of the French Civil Code. This new arrangement can be suitable for same sex or male/female partnerships, and brings with it a number of advantages including savings on inheritance tax.

The procedures for entering into a PACS are relatively simple and require only a declaration by the two partners, two orignal copies of which are lodged with the civil court. A French 'notaire' or 'avocat' can help with the wording and offer advice as to how you can structure the partnership arrangements - for example in relation to property and other assets held by one or both partners.

The PACS continues to exist until amended (by filing a declaration at the court) or terminated by mutual agreement; by either partner wishing to end the PACS; in the case of marriage by one of the partners; and on the death of one of the partners.

Under amended inheritance laws, valuable savings can be made if one partner leaves his/her estate (property) to the other, where before inheritance tax was payable at 60%, the high rate for bequests outside the immediate family. It is essential to take formal legal advice, depending on your status as a French resident or not, before entering into a PACS.

Employed and self-employed in France

Many people who come to France to work or set up a business can easily find themselves lost in the country's byzantine bureaucracy, especially when faced with the complicated structure of tax and social security. Having been both employed and set up my own business, I offer a few survival tips born of practical experience.

Being employed
Being employed can be relatively simple and the main differences concern your type of employment contract, which can be either long term/indefinite (CDI) or comparatively short term/fixed (CDD), such as for the holiday season or to replace someone on maternity leave. The other choices are between full time (35 hours per week) or part-time (generally less than 20 hours).

When you get your payslip, you will see that there are around 12 or 15 different deductions for unemployment, social security, health and pension, paid partly by you but the major proportion by the employer, effectively adding a further 50% to the salary cost of employing you. The social security payments (known as 'cotisations') apply whether you are retired or already covered by insurance, and have to be regarded part of the cost you pay for the privilege of being employed and working. The burden on the employer is considerable and clearly a disincentive to employing any more staff than are absolutely necessary.

Income tax is payable by the employee annually, using a form that is not dissimilar to the British version. There are the usual 'personal allowances' or bands of tax free income, and certain expenses can be deducted such as travel-to-work costs, even by employees. If you are married, your tax rate is calculated per houshold rather than individually, with tapered reliefs for, for example, a non-working spouse, children of school age, parents who may be dependent and so on.

In terms of social security, benefits are fairly generous in terms of unemployment, sickness, maternity leave etc. If you become unemployed, you need to first register at your local combined job centre (known as a 'pole d'emploi') which will deal both with your benefit payments and helping you find your next job.

Self employment
Freelancing in France has never been particularly easy until the introduction of the new status of 'auto-entrepreneur' in January 2009. Still in its infancy, the system has been experiencing teething troubles, largely to do with the payment of social security contributions to your designated collection organisation (known as a 'caisse') which can vary according to the type of work you do. For example, most intellectual occupations, or liberal professions such as teaching or consultancy, come under a body known as CIPAV which has been found to be particularly inefficient. Artisans and crafts people have also experienced problems due to opposition by some trade associations, who claimed that the livelihoods of their members would be jeopardised by competition from 'unqualified' auto-entrepreneurs. Legislation requiring proof of competence has as a result been adjusted and comes into effect in January 2010.

Despite all these problems however, the new system had attracted nearly 200,000 registrations by the summer of 2009 and includes those already in jobs, unemployed, retired and those transfering from other tax and social security regimes. Relatively simple by French standards, auto-entrepreneurs pay a fixed percentage of turnover, combining tax and social security contributions, at a rate of 13% for commercial activities (turnover limit of 84,000 euros annually), and around 21% for services and liberal professions, with a turnover limit of 34,000 euros. VAT/TVA can be neither charged nor recovered, and if you exceed the annual turnover limits you are obliged to change to another regime. Note that the percentages charge are on total income invoiced, not on profit after allowable expenses.

The registration process is relatively simple and can be done online, as can any changes in your type of activity, or indeed if you decide to close your business. If however you have high business costs or need to register for VAT (for reasons of cost savings or higher sales margins, for example) then you need to consider one of the alternative regimes, where in some cases you can opt for either a system of fixed percentage of costs or one based on actual deductible costs. For these it is advisable to consult a French accountant.

Questions have been raised as to whether the auto-entrepreneur system can provide a backdoor route into France's social security system, typically in the case of British people moving to France who cannot get social security cover, as they are below the statutory retirement age and not in receipt of a British pension. One of the attractions of the auto-entrepreneur scheme is that tax and social security are only payable on actual (as opposed to notional turnover) which is not the case with some other more burdensome regimes. The question is still being debated and recent statistics seem to indicate that large numbers of auto-entrepreneurs are already in jobs or have a working spouse, or are retired and receiving a pension, and in many cases are simply following a part-time activity that will bring them some additional income at the end of the month.

The auto-entrepreneur scheme is open to everyone including non-French living in France. There is a lively discussion forum and links to other information sites on www.auto-entrepreneur.fr to which I sometimes contribute. The subject has also been debated in English on the www.totalfrance.com and www.livingfrance.com forums, particularly in relation to the social security implications.

The syndic pt 3

We have all now received a copy of the minutes of the meeting of the syndic (the building management company) held in July and known as the 'procès-verbal'. Few surprises, but some points of interest for other co-owners:

1. Ownership of the building's common parts is divided among the co-owners in proportion to the size of their apartment, and comprises a total of 100,000 shares, sometimes called 'tantièmes'. The bigger your apartment, the more shares you own. Just over half (53,100) of the share owners were present or represented by proxy, against 46,900 absentees. So any subsequent voting was based on the views of just half the apartment owners.....

2. Routine matters were dealt with first, such as approval of last year's accounts and the provisions for 2009/10. The only point of interest was that the syndic management company asked for a three-tear renewal of their contract but it was voted to renew it for just one year. The reason cited was the fact that the local firm we use has recently been taken over and the co-owners wished to adopt a 'wait and see' approach before approving a three year contract.

3. It was also decided to go ahead with the internal painting of the building - corridors, entrance hall, stairways etc. Two estimates were considered, one at 62,000euros and another at 52,000 euros, including laying new carpeting in the corridors. The lower estimate was approved, from a local firm. There will be a special call for funds in October, divided among the owners in proportion to their shares. My personal share will be about 550 euros.

4. As reported below, the co-owners also voted to instruct lawyers in the matter of the restaurants on the ground floor of the building, but with a limit of 2,000 euros. There will be a special call for funds in January 2010.

5. Proposals to set up a provisional fund against the cost of future building and maintenance works was outvoted unanimously.

6. Among the informal issues discussed was a decision to reduce the number of estate agents' For Sale and To Let signs on the outside of the building, and a reminder that dogs should be kept on a leash while in the building.

Altogether a typical, rather uneventful AGM which nonetheless lasted nearly three hours!

Permis de construire or déclaration des travaux?

Virtually all building works, involving either a new build or renovation, require the French equivalent of a building permit, or at least a notification of what work you intend to carry out. Applications are handled by your local Mairie, sometimes in conjunction with the regional office of the DDE who are responsible for overall town and country planning. In all cases it is advisable to consult them first, either in person or through an architect, as early discussions can give you an idea of what is or is not permissible, before commiting to any major expense.

Starting with the simplest, almost all interior work can be undertaken without any kind of planning permission, provided it does not alter the overall living area or affect the exterior of the building (such as creating new doors or windows). However, if you live in a co-ownership property, the rules of the 'syndic' (building management company) may affect what you can and cannot do, particularly if it affects load-bearing walls, the building's common parts, and exterior balconies or terraces. You will need to submit a request and plan to the annual general meeting of the co-owners for approval. The most common requests include joining two or more apartments to make a single unit, and glazing-in a balcony or loggia.

Exterior painting (known as 'ravalement') has to be carried out at regular intervals, according to local byelaws, and is subject to a prior declaration. There may be restrictions on colours and types of materials used. Permission must also be sought to erect scaffolding on a public path or highway, and to position a skip outside your home.

Works that are typically subject to a prior declaration include installing an open swimming pool, change of use that does not require major work, and small terraces not higher that 60 cms and/or less than 20 m²surface area. The declaration is lodged using a special form and the Mairie has one month to raise objections or propose modifications.

Closing-in your property with a wall or fence also requires prior declaration, and there may be limitations on height and the type of materials used, and restrictions or objections in relation to the public highway.

All other work will require a building permit, and the submission of a comprehensive dossier including plans, elevations and descriptions of the proposed construction. You are required to use an architect if the overall surface area is more than 170 m² - and frequently advisable in the case of smaller new builds or extensions.

The dossier is open for public inspection at the Mairie, where the planning department has a minimum of two months to reply (3 months if the archiect from 'batiments de France' has to be consulted, in the case of proposed works close to the site of a historic monument). Once issued, the building permit can be challenged by objectors (neighbours, conservation groups etc) during a further period of two months. As a result building works, even in straightforward cases, cannot start for a period of four or five months from initial submission.

Once construction starts, the Mairie must be notififed, and again on their completion, when a 'certificate of conformity' will be issued within 3 months, provided everyone is satisfied that the work has been completed in accordance with the original plan (subject to any alterations required).

It goes without saying that works that have been undertaken without the required permissions and approvals are subject to heavy sanctions and may in some cases be ordered to be pulled down.

Buying French property - transaction costs

There are certain fixed and unavoidable costs that have to be paid when you buy a typical French property. The main one - described somewhat inaccurately as the 'notaire's costs' - concerns a percentage of the property's sale price which is levied by the French government in land registration charges and taxes. The notaire's actual fees for completing the transaction are in reality quite low and controlled by the state. They are typically around 1% (plus VAT/TVA) of the purchase price, compared with the 6% - 7% government regisration charges and taxes.

These amounts are reduced in the case of new-build properties (on which VAT/TVA of 19.6% is included in the sale price). The property description will normally include the words 'frais notaire réduits'.

The total cost of buying a French property - notaire's fees plus government charges - can be estimated quite simply using standard tables, at the time of purchase and are clearly set out in the 'compromis de vente' or pre-contract.

Some notaires are licensed to act as property negotiators, in addition to their princiapl role as legal experts and tax collectors, and again their charges are quite modest at an average 2.5% (plus VAT) of the property sale price, probably less than a typical estate agent. They must hold a valid 'mandat de vente' for any property they are trying to sell.

French estate agents are licensed by the Prefecture and are free to set their own rates of commission (average 5% to 10% plus VAT of the sale price of the property), the amount generally reducing in proportion to the value of the sale. The agency's commission rates must be publicly displayed at the agent's offices and are clearly set out in the 'mandat de vente' which must be signed by the property's owner (the vendor) and the agent. The 'mandat' is a formal agreement between the owner and the agent allowing the latter to market the property in return for a percentage commission in the event of a sale.

Estate agents' commissions are normally paid by the vendor and are taken from the sale price of the property, which will be advertised as 'F A I', meaning inclusive of agency commission. The sum received by the vendor, after deduction of the commission payable to the agent, is known as the nett vendor price.

The other transaction costs - notaire's fees plus French government taxes - are paid by the buyer. Notaires will also charge a small extra fee for advising the buyer and drawing up the necessary documentation in connextion with matters such as a change of marriage regime, civil partnership (PACS), a power of attorney, or a French will, all matters which you may wish to organise at the same time as you buy your French property.

Spanish recession hits property sector

Some 400,000 Spanish companies hit by the recession have been forced to close during 2008, nearly 20% of them related to the construction industry, and causing a loss of 620,000 jobs and representing nearly 12% of the activity in this sector.

The only surprise is the speed with which this has happened, as the building sector was in full bloom until late in 2007, with heavy concentrations in popular tourist areas along the southern Mediterranean coast and Canary islands. With some 600,000 new dwellings coming onto the market annually, no-one paused to question whether demand would dry up. As a result many speculative new developments have failed to find buyers and lie half completed or empty.

Fortunately France has been able to weather the crisis, due to tradtionally cautious lending by the banks - loans are based on your ability to repay rather than the value of the property you are buying, and monthly repayments cannot exceed one-third of your disposable income. Although some projects have been put on hold, there is a continuing demand for new housing, based on projections over the next 15 years.

French property sold furnished - or not?

Many properties, especially small apartments and second homes, are frequently offered for sale complete with furniture. This can be a mixed blessing as many holiday apartments and villas, designed only for occasional use or for letting, have a tendancy to be furnished with rejects from the (French) owner's main home, and may include a lot of junk that it will be the new owner's job to remove. British and Scandinavian owned properties tend to be more stylish.

If there is a significant quantity of furniture and equipment (such as a washing machine, fridge etc) included in the sale price, it should be listed and itemised to avoid any later disagreements about what was or was not included. It is possible to add a value to each item listed and deduct the total from the sale price of the property: this will marginally reduce the value of the property itself for taxation and land registration purposes.

Disputes often arise about what can or cannot be removed by the owner/vendor between the signature of the 'compromis de vente' and the final sales act. Certain items are regarded as forming part of the property's normal structure and cannot be removed. These include doors, windows, sanitary ware, boilers and heating equipment. The owner can however, without express agreement of the purchaser, remove kitchen equipment, bathrooms fittings, curtain rails, light fittings etc, provided this can be done without materially damaging the property.

It is essential therefore to reach agreement beforehand and visit the property, accompanied by the agent, on the day of signing the final sales act, to ensure that only those items expressly agreed have in fact been removed, and you are prepared to accept the property in the state in which you find it.

Servitudes - a short guide

Servitudes can be simply described as obligations or restrictions attached to a property - and by extension to its owners - and which have been established either in the interests of the general public or one or more individuals.

Servitudes considered to be in the public interest typically can include any restrictions relating to the design and construction of a property when it is close to a historic site, a conservation area, zones of special architectural interest, or in connection with access to public facilities such as electricity pylons, transformers etc; gas, telephone and water installations; or related to public safety, including roads (where land might be requisitioned for widening) and access for emergency vehicles. In areas designated as being at risk, for example of flooding, there may be restrictions about the level of a property's ground floor in relation to the public highway.

There are invariably restrictions in terms of a building's orientation and its alignment with other buildings and the public highway.

Private servitudes relate to matters such as the height of plants and trees in your garden, and their distance from the property's boundaries; buildings and extensions in relation to their height, distance from boundaries, and your neighbour's right to sunlight and fresh air, which cannot be compromised. Local byelaws and/or the rules of the co-ownership syndicate invariably include restricitons such as the height and type of boundary wall, fencing or shrubbery.

Disputes frequently arise with regard to rights of passage across private land, and they will always be granted to allow access to an otherwise isolated property (to or from the public highway). Building extensions, including terraces, are not allowed to intrude into common areas - such as a garden or courtyard - of a co-ownership building. However if a wall of your building forms part of the boundary line, your neighbour cannot deny you reasonable access to carry out maintenance work on your building, using a ladder or scaffolding on his property.

It is advisable to check carefully when buying a property for the presence and implications of any servitudes, which should be accurately described in the property documents. In addition, national and local planning regulations apply to every type of new building, extension or alteration, and you should always take appropriate advice before starting any work.

Viewing properties

(1) Viewing properties, even for a day, can sometimes involve up to three or four days of prior preparation, including discussions with estate agents, arranging preliminary viewings with them and with property owners, drawing up a short list and then discussing and agreeing it with the client. This is then followed by another round of appointment making with the agents, the owners and eventually the client, so that he/she can enjoy a day or more of carefully scheduled property viewings, on their arrival in France.

(2) Negotiators who work for estate agencies generally have to pay their own costs such as car, petrol and insurance. They rely for their living on part of the commission on the sale of a property. They are therefore unwilling to spend a lot of time and effort if a client is unable to buy at the time (ie is 'just looking'). It is advisable to have funds in place and be genuinely in a position to buy.

(3) Many properties, especially houses, tend to be occupied by their owners until sold. As a result, viewings are always by appointment with the owner/occupier, and the agent responsible. All this requires fluency in French and French manners, and we accompany our clients on viewings with the French agent.

(4) Property viewing takes time, as travel distances are greater, and it is normally only possible to visit two to three properties in the morning, and perhaps up to four in an afternoon/early evening. A single day is generally insufficient time in which to view a reasonable selection.

(5) Once you have seen a property you like, return visits are advisable, at different times of day, and to explore the local area for shops, schools, transport links etc that might influence your final choice. This all takes time and is easier if you are working from a short-list.

(6) Research shows that the majority of buyers select the area and then choose a property, rather than the other way round. If you feel you need to look at other areas, then you can do this without necessarily involving an estate agent or property searcher, and get a feel for local property prices by looking in agents' windows. We can however offer general information and guidance at this point.


Points to note
(7) We always advise clients to have funds in place before starting a property search. This means having either cash resources (for example from the proceeds of another property sale) or a loan agreement in principle from a bank or mortgage provider. Some agencies - and indeed some owners - insist on written evidence of this, and when making an offer on a property you like, you will be asked to confirm how you intend to pay. A 10% deposit will then be required when you sign the pre-sale contract ("compromis de vente").

(8) Having a reasonably clear idea of what you want and having funds in place gives you a unique advantage when buying a property, and can often help the negotiator to secure for you a valuable reduction on the asking price.

(9) Buying a French property for either permanent living or as a second home is a major investment, both financial and emotional, and justifies taking time and care before you commit to buying. People sometimes change their mind in the course of viewing, adjust their budget upwards or downwards, and occasionally end up buying a modern two-bed apartment on the coast when they originally set their heart on a country cottage with several hectares of land!

(10) Our job is to alert our clients to the range of possibilities - for living, investment, letting etc - based on our knowledge and experience of the area and the complexities of the property market. You will also have an opportunity to meet past clients, most of whom live locally and have become long standing friends over the past seven or eight years. They can tell you about their own personal experiences and what it is like to live in this lovely region of France.

(11) After you move in, we can also help with matters such as getting a phone line, internet connection, bank account, local builders and decorators, legal advisors, social security, health care, setting up a business or in self employment etc, all based on our personal contacts and experience, and recommendations from past clients.

(12) We can also provide ad hoc information and advice on buying to let, how you can make a French will, using alternative purchase vehicles such as a French SCI or UK limited company, changing your marriage regime, entering into a PACS, and other issues it is important for you to understand when buying a French property, and introduce you to a French notaire or other expert as required.

Holiday season

The comparatively short holiday season is gradually drawing to a close on the French Mediterranean coast, with only a couple more weeks to go. Even the last week in August can be quiet. Holidays are very much tied to school terms, with the new one begining on Tuesday 2 September, and families need to be home in order to get their children ready. There is a huge list of items they need to by, like pens and exercise books, and government grants are offered to help defray the cost.

Now is not a good time to go house hunting, as many propeties are occupied by their owners or let to vacationers, and getting around by road is not easy due to the extra traffic. Estate agencies may be closed or understaffed as negotiators also take time off with their families. French notaires and town hall officials tend to be absent, so transactions may take a little longer. However, everything will be back to normal on 1 September!

Getting around the region

As part of the region's heavy investment in tourism, the department of Pyrénées-Orientales is blessed with an excellent transport system, designed for heavy usage in the peak summer months but providing delightfully clear roads, and half-full buses and trains for the rest of the year. Whether you arrive at Perpignan, either by direct flight into the international airport at Rivesaltes (20 minutes from the city centre), by express train from Lille (Euro-Tunnel links from London) or Paris, or by road along the A-9 auto-route south from Lyon, you are faced with a wide choice of options if you are continuing your journey south or remaining in the region.

Perpignan can also be reached by air to Girona (Spain)- situated an hour's drive south across the border at Le Perthus and the Pyrenees - and Barcelona (2 hours), with both airports offering a huge selection of European and international destinations if you are travelling further abroad. All the low cost carriers are firmly established at both airports, alongside BA and other long established airlines.

Continuing your journey south from Perpignan by rail at present involves taking the spectacular Mediterranean coastal route (Elne, Argelès, Collioure, Port-Vendres, Banyuls, Cerbère) where you can change to the Spanish trains at Port-Bou for the onward journey to Girona and Barcelona. The average journey times depend on the Spanish connexions but the unrivalled scenery is well worth the delay.

This will all change in two or three years when the fast TGV link will operate from the new international station in Perpignan, stopping only at Girona, and reaching Barcelona in well under an hour.

By road, the A9 south heads inland a bit, crossing the border at Le Perthus and continuing across the heights of the Pyrenees to Figueras, Girona and Barcelona. A 'route nationale' runs parallel to the motorway, bypassing the principal towns if you wish to benefit from less frenetic, toll-free travel. Between Le Perthus and Barcelona you will see signposted the popular Coast Brava resorts - all still flourishing - which will evoke memories of the early days of popular package holidays.

The closeness of Spain tempts many of us living in the region to hop across the border on regular shopping trips, as prices of virtually everything are even lower than in our part of France.

Within the region, the main north south routes are the N114 which serves the Mediterranean coast, and becomes a steep, winding two-laner just after Port-Vendres. It is however used daily by the local buses, lorries and vans making deliveries, and tourists in camper-vans and private cars.

Further inland is the N115 which goes to Céret and the spa resorts such as Amélie-les-bains, before petering out at the Spanish border, which can nonetheless be crossed if you are prepared to tackle the winding mountain road for several miles.

Even further west is the third major road, the N116, which goes to Prades (famous for its annual music festival), and on to the ski resorts around Font Romeu, and Andorra, for more cheap shopping.

The local towns and villages around Perpignan and as far south as Cerbère are served by bus, with a recently introduced flat rate fare of 1 euro, susidised by the Conseil Général. The journey into Perpignan rarely takes more than half an hour from virtually anywhere within the department.

Bank bridging loans

When selling a French property and buying another, it is possible to obtain a short term bridging loan - known as a 'prèt relais' - secured on the property you are selling, in order to help finance the purchase of the one you wish to buy. Bridging loans are available from all the French high street banks, and are normally based on up to 70% of the value of the property you are selling. They are normally for a duration of 24 months when they must be repaid in full.

I personally advise clients not to consider taking out a bridging loan on a property that is not yet sold, even if they are convinced they have found the 'house of their dreams' at a price they can afford. During the recent slowdown of the property market, some 30,000 vendor/buyers in France have found themselves caught in this trap, having agreed to buy a second property while their existing home remained on the market un-sold, beyond the two-year loan period.

They were thus faced with the prospect of paying two mortgages, and in some instances obliged to sell one or both properties in order to get out of the financial difficulties they faced. In some cases these included job loss. Under pressure from the banks, many were forced to sell at a loss, leaving less money available to pay the bridging loan and finance the new property.

The French government has asked the banks to be lenient with customers caught in this situation but it is difficult to assess how well their request has been received. In some cases, banks will extend the loan period beyond the normal two years, but this still leaves the customer with the problem of facing two sets of loan repayments.

Even in France's highly controlled property market and extensive protections for both buyers and seller, a property transaction can fail at the eleventh hour for numerous reasons. In my experience, it is never wise to embark on a second property purchase until your first property is sold, and the money safely in your bank. As a cash buyer, you are then in an ideal position to take your time and negotiate the price of your next property purchase.

Parties communes, parties privatives

When buying a property in a co-ownership building ('copropriété'), such as a block of apartments, it is important to distinguish between the parts that are designated as 'held in common' and those that you own outright ('parties privatives').

Generally you own outright your own apartment, and also acquire a share in the building's common parts, the share being calculated in relation to the size of your apartment and included in your property deeds. The building's common parts include the ground it is built on, foundations, gardens, driveways, entrance, hallway, corridors, stairways, service areas (for dustbins etc), lift, roof structure, technical services (heating, ventilation, TV aerial etc), and communal facilities such as a swimming pool or tennis court.

What you own outright is the space within your own four walls, within which you can do more or less what you like (such as re-arranging the layout or installing a new kitchen), provided you do not endanger or damage the building's infrastructure, for example by removing a supporting wall.

It is important to note the position in relation to balconies and terraces. In some buildings, you may find that they are designated as a 'partie commune' of which you have exclusive use. Under a 1965 law it was decided that you own the floor of a balcony or terrace (so you could re-tile it, for example) but not its structure (so cannot remove it). You also do not have the right to sell your balcony or terrace separately from your apartment!

As a result, it is invariably necessary to ask the syndic (building management) for permission to alter a balcony, loggia or terrace, for example if you wish to enclose it. There are also rules about changing the floor, in relation to drainage from the building's common parts and the risk of flooding an apartment below yours.

The syndic may also have strict rules about what you can and cannot do on your balcony, for example relating to shrubs and plants, sunblinds - and the hanging of washing. My own syndic has recently voted to ban estate agency For Sale and To Let signs in the interest of aesthetics, using their right to apply rules in respect of the balconies which are defined in our syndic's constitution as common parts.