Unfair law costs you to sell

David Theoff is angry and after justice

In order to complete the recent sale of his apartment in Golfe Juan, Mr Theoff was told by his UK lawyers that he would have to appoint a fiscal guarantor to make sure that any capital gains made on the sale were duly reported and the tax paid. An unprofitable loss “What is absolutely wrong is that there was no profit made on the sale at all. I bought the apartment for 535,000 euros two-and-a-half years ago, and sold it for 440,000 euros this summer.

So how can capital gains tax be due when a loss has been incurred?” The cost of a fiscal guarantor is up to one per cent of the total sales price, not a percentage of any profit, which can make the cost of appointing a fiscal guarantor a significant ex-pense. In Mr Theoff’s case, his UK-based solicitors, who employ a French notaire, were able to negotiate a fee of 0.6 per cent of the selling price. He actually paid a total of 3,100 euros as opposed to a possible 5,236 euros to appoint the guarantor. An unfair home advantage Mr Theoff says it is not just a question of money that makes him angry, but the fact that the rules are not applied to French residents. Also, in his case there was a loss on the sale. “Why should I have to pay three thousand pounds for something that clearly doesn’t exist?” Property sales are only exempt from the obligation to appoint a guarantor if the price is less than 150,000 euros or if the seller has owned the property for at least 15 years. “On the Cote d’Azur, it’s not a problem for the English to sell up and leave because there are other buyers, but in rural France it’s a different story because there are no buyers,” says Mr Theoff.“This fiscal gua-rantor thing is just another impediment for the seller.”

The need for a fiscal guarantor acts as protection for the French notaire handling the sale, according to Mr Theoff: “I like the French system, especially the com-promis when you buy, but the notaire has no obligation to point out problems or pitfalls. Really, the notaire is a state-appointed tax col-lector.” Headed for the courts “I have asked the Inland Revenue service in the UK to take this up with their French counterparts, since I believe the situation is illegal under EU law and breaks the UK France Double Tax Treaty. They have taken a head-in-the-sand attitude so far and if I am ultimately unable to get a satisfactory response through them, I am prepared to take this all the way to the European Court. I will be looking for other people who have found themselves in a similar predicament so that we can bring a class action, which would be much more affordable and would underline the seriousness of the matter. Principle over profit It’s not so much about the money, but the principle. I hope that I can interest other people in the process of selling or thinking about selling, and those who have already sold, to join me in this action.” Mr Theoff can be contacted at david@theoff.me.uk

IB