The Civil Partnership Act 2004 created, for the first time in the UK, a legally recognised union for same-sex couples.  It granted such couples rights and obligations almost identical to marriage.  It also deemed same-sex couples in certain unions overseas to be civil partners, giving them such rights and obligations in the UK whether they wanted them or not.

While the couple may have no connection with the UK, this may be of no concern to them.  If however, they decide to move to the UK, for instance – they need to be aware of the implications.

The French Civil Solidarity Pact, known as a PACs, is available to both same-sex and opposite-sex couples.  Opposite-sex couples who enter into one are not treated as married in the UK.  Conversely same-sex PACs couples are treated as being civil partners in the UK.  In consequence, a PACs couple which later forms a connection with the UK may find itself in an entirely different legal regime depending upon whether they are same-sex or opposite-sex.

This legal quirk is not unique to the French PACs.  It applies also to those entering into unions in, for example, Germany (lebenspartnerschaft), Denmark (registeret partnerskab), the Netherlands (geregistreerde partnerschap) and Vermont (civil union).  There are many other examples.

So what rights and obligations do UK civil partners acquire which they would not have had prior to the registration of their partnership? 

1.          Inheritance tax – assets of any value can generally (except in certain domicile mismatch situations) be left to a surviving civil partner, as with a surviving spouse, free of inheritance tax.  Bequests between unregistered partners are taxed at 40 per cent unless either the assets concerned are exempt or some or all of the deceased’s nil rate band is available (up to £325,000 in the current tax year).

2.          Intestacy – if a civil partner dies without leaving a will, their surviving partner has a statutory right to a proportion of their estate.  A surviving non-registered partner has no automatic right under the statutory rules.

3.          Capital gains tax (CGT) – gifts of assets between civil partners generally do not trigger a CGT charge as they are deemed to occur on a “no gain, no loss” basis.  The same transfer between unregistered/unmarried couples triggers a disposal which could result in CGT.

4.         CGT again – civil partners can only elect between them for one property to attract the main residence exemption from CGT.  Unregistered/unmarried couples can elect one property each.

5.          Income tax – the equivalent of “married couples’ allowance” is available for certain civil partners.   Because, though, it applies only to claimants above a certain age and with a certain income level it tends not to be that common.

For the same-sex couple who entered into a PACs in France, the rights and obligations for which they signed up are rather more limited:

A.      Joint income tax liability from the start of the third year after registration.

B.      Joint liability for wealth tax immediately after registration.

C.      Joint allowance for gift tax after two years of registering.

D.      No automatic inheritance rights on the death of one partner unless there is an agreement.

One of the other important differences is the legal procedure for ending the relationship.  A PACs can be terminated by the Court upon the joint request of the parties, by the death or marriage of one party, or unilaterally by just one of the partners. 

A civil partnership is “dissolved” in much the same way that a marriage ends by divorce.  Consequently, while the legal ending of the relationship might be relatively straightforward, the legal division of the assets can often be significantly more involved, more stressful, more lengthy and more costly – both in terms of legal fees and of the likely award against the wealthier party (especially with England and Wales now being probably the most generous jurisdiction in Europe, and possibly the world, when it comes to the poorer spouse/partner). 

A particular point to note in this regard is that periods of cohabitation which lead seamlessly into marriage or civil partnership are viewed by the English courts as part of the length of the marriage/civil partnership.  The longer the marriage/civil partnership, the more likely a 50/50 division of assets.  Lengthy cohabitation tends to be common in civil partnership cases simply because, until very recently, there was no further legal step that could be taken.

Good legal advice is, accordingly, a must for any same-sex PACs couple considering moving to the UK.  The small geographical distance across the Channel masks a significantly more sizeable difference in the legal treatment they and their assets will receive.