Dual citizenship tax

aroominyork

OH (an Aussie, considering getting UK dual citizenship) and I are thinking about spending large parts of our retirement in France, where one of our kids lives. I've discovered I may be eligible for German citizenship, which would solve the visa/time allowed issues. My question is whether there are any tax implications in terms of British, French or German tax during semi-retirement (we both still do small amounts of remote work), retirement or on death? I would consult a tax lawyer if we moved forward with this plan but some initial pointers would be welcome. 

MyRealNameToo

Neither German nor British citizenship add any material duties, there arent requirements for taxes to be paid etc if you arent actually living in their countries (unlike the US) or military service or such. 

NorthYorkie

In most cases citizenship is not a factor in determining liability to tax. What counts is your 'tax residence' and the location of the sources of your income and assets. From what you say, you could be potentially liable to both UK and French tax subject to relief available under the UK-France Double Taxation Treaty. (France: tax treaties - GOV.UK)

You should certainly talk to a member of either the Association of Taxation Technicians or the Chartered Institute of Taxation.

poseidon1

aroominyork said:

OH (an Aussie, considering getting UK dual citizenship) and I are thinking about spending large parts of our retirement in France, where one of our kids lives. I've discovered I may be eligible for German citizenship, which would solve the visa/time allowed issues. My question is whether there are any tax implications in terms of British, French or German tax during semi-retirement (we both still do small amounts of remote work), retirement or on death? I would consult a tax lawyer if we moved forward with this plan but some initial pointers would be welcome. 

Agree NorthYorkie's observation that citizenship is not the determining factor in ascertaining your joint year by year CGT/income tax exposure in France/UK.

It will be based on days of tax residency in each jurisdiction and which country has the primary taxing rights on your income and gains as a result.

At the moment as  non EU citizens you are both restricted to 90 days visa free stays, although has you intimated, your obtaining German Citizenship would certainly release you from that restriction, permitting you to reside in France as long as you like. Whether that freedom would also extend to your Australian born wife, would require specific advice since her obtaining dual UK citizenship would not  assist her in that respect and non EU spouses of EU citizens do not necessarily benefit from unconditional visa free  Schengen access.

If you think you may ultimately seek to become French tax resident, you also need to look into the complex rules relating to IHT and French death duties and how your estate planning will be adversely affected by having a foot in each tax jurisdiction.

Whether you were aware of it or not, your UK IHT exposure was already complicated by the fact your spouse was not UK born, and as a result prior to 5 April 2025 was not automatically entitled to the unlimited exemption for testamentary gifts between spouses. 

This situation has changed to a years of tax residency test as explained in the following article -

https://www.kiddrapinet.co.uk/wills-probate/inheritance-tax-changes-from-april-2025-what-international-couples-need-to-know/#:~:text=The key shift is the,Post-Departure Exposure

Both of you will  not only require cross border UK/French advice if you intend eventually breaching the French 183 days in each calender year for tax residency purposes, but perhaps long term IHT/ death duties and future  estate planning advice if you end up holding assets in both countries.

aroominyork

Thank you All, very helpful. And thanks poseidon1 for mentioning the IHT changes and the link saying "A person will be treated as UK-resident for IHT if they have been UK tax resident for at least 10 of the previous 12 tax years. The full spouse exemption will only apply if both spouses meet this long-term residence test." We are OK there - she has been tax resident in the UK since 2001. She has indefinite leave to remain and is only looking at citizenship because of slight nervousness about how those rules might change - obviously becoming a Brit is a big step for an Aussie, especially during an Ashes series! 

I will look further into "non EU spouses of EU citizens do not necessarily benefit from unconditional visa free  Schengen access."  PS If this is constant across Europe, it means a residence visa is required over 90 days. Can you say anything about whether that is generally considered a formality?

poseidon1

aroominyork said:

Thank you All, very helpful. And thanks poseidon1 for mentioning the IHT changes and the link saying "A person will be treated as UK-resident for IHT if they have been UK tax resident for at least 10 of the previous 12 tax years. The full spouse exemption will only apply if both spouses meet this long-term residence test." We are OK there - she has been tax resident in the UK since 2001. She has indefinite leave to remain and is only looking at citizenship because of slight nervousness about how those rules might change - obviously becoming a Brit is a big step for an Aussie, especially during an Ashes series! 

I will look further into "non EU spouses of EU citizens do not necessarily benefit from unconditional visa free  Schengen access."  PS If this is constant across Europe, it means a residence visa is required over 90 days. Can you say anything about whether that is generally considered a formality?

Regrettably, in the same way visa and entry rights for foreign born spouses has been in a state of flux in the UK, reflecting varying degrees of political hostility/acceptance of foreign immigrants , one can see similar themes playing out in many parts of Europe.

In that respect since you have family in France you probably have greater insight on this question than I?   However the EU finally going live with its long heralded EES entry system seems to point to a general desire to tightening up the entry requirements across the region.

Emmia

poseidon1 said:

aroominyork said:

Thank you All, very helpful. And thanks poseidon1 for mentioning the IHT changes and the link saying "A person will be treated as UK-resident for IHT if they have been UK tax resident for at least 10 of the previous 12 tax years. The full spouse exemption will only apply if both spouses meet this long-term residence test." We are OK there - she has been tax resident in the UK since 2001. She has indefinite leave to remain and is only looking at citizenship because of slight nervousness about how those rules might change - obviously becoming a Brit is a big step for an Aussie, especially during an Ashes series! 

I will look further into "non EU spouses of EU citizens do not necessarily benefit from unconditional visa free  Schengen access."  PS If this is constant across Europe, it means a residence visa is required over 90 days. Can you say anything about whether that is generally considered a formality?

Regrettably, in the same way visa and entry rights for foreign born spouses has been in a state of flux in the UK, reflecting varying degrees of political hostility/acceptance of foreign immigrants , one can see similar themes playing out in many parts of Europe.

In that respect since you have family in France you probably have greater insight on this question than I?   However the EU finally going live with its long heralded EES entry system seems to point to a general desire to tightening up the entry requirements across the region.

And of course once EES is fully live, it will be possible to identify people overstaying their welcome in the Schengen zone more easily - attracting a fine and/or a ban from the area. Having the right visas in place will be essential.