The following other Taxes are applicable to all types of property ownership:
- French Wealth Tax or I’impôt sur la Fortune
- Local Property Taxes
- Cotisation Fonciere Des Entreprises
- Taxe de Sejour
- Taxes on Disposal of Property
French Wealth Tax or I’impôt sur la Fortune
Non-residents of France who own assets situated in France, currently valued at over €800,000 on 1 January of the taxation year, are liable to Wealth Tax on those French assets, including the value of shares in any special purpose company which owns real estate in France, like a Société Civile Immobilière (SCI).
However, loans to the individual specifically attached to the French assets may be deductible against the asset value to reduce the wealth tax calculation. As a general rule, taxable assets are valued according to their current market value.
The wealth tax rates for 2018 are:
|GROSS FRENCH ASSETS OF HOUSEHOLD||TAX RATE|
|0 – €800,000||0%|
|€800,001 – €1,300,000||0.5%|
|€1,300,001 – €2,570,000||0.7%|
|€2,570,001 – €5,000,000||1.0%|
|€5,000,001 – €10,000,000||1.25%|
Local Property Taxes
If the property is held as a holiday home or is being let on a short term basis this tax is payable by the owner, however if the property is let on a long term lease (1 year or more) the occupier of the French property is liable for this tax i.e the tenant.
It is payable by the person who was the occupier on 1 January. It is usually issued in the last quarter of the year (October) and is payable prior to 15 December each year. There are exemptions for over 60s and also if the property is incapable of occupation due to extensive renovation.
Taxe Foncière is a tax on property and like the Taxe d’Habitation above, is used to provide your local services. The amount of tax depends whether your land has buildings on it or not.
Thus there can be two parts to your bill: “La taxe foncière sur les propriétés bâties” (land with buildings) and “La taxe foncière sur les propriétés non-bâties” (land without buildings).
The owner of the French property is liable for this tax. It may be possible to arrange that the tenant reimburses the landlord for the amount relating to bin charges (taxe ordures ménagères). It is also known as “impôt foncier” and is collected by the local municipality in which the property is situated.
The tax assessment is issued in the third quarter of each year (usually August/September) and is payable prior to 15 October. It shows the amount due and the basis on which calculations are made.
Cotisation Foncière des Entreprises (CFE)
CFE is a tax on the landlord who runs a business of renting properties. It is levied on the gross rental income and generally applies to Furnished Lettings only. In certain local jurisdictions an exemption from the tax can be claimed If the tax does apply a reduction in the tax may be claimed in certain circumstances.
Taxe De Sejour (Tourist Tax)
This is a tax to be paid by guests at check-out in a residence. In some instances this can be applied to Furnished lettings. It is applied to the number of nights spent by the guests and is payable to the French Administration where the local jurisdiction has decided to impose the tax.
Taxes on Disposal of Property
Capital Gains Tax (CGT) or Impots Sur les Plus-values
The rate of CGT for both French and non-French residents, who are residents of an EU country, is 34.5% of the net gain on the property (the property has to be held for at least 5 years otherwise it is treated as income and is taxable under income tax rules).
The gain can be reduced by a flat rate 7.5% to account for the costs of acquisition (or the actual amount if higher) when calculating the CGT payable.
There is also a 15% deduction for any enhancement expenditure. The 16% tax is reduced by 10% for each year of ownership after 5 years. Therefore if the property is held for 15 years no CGT will be payable.
French Gift & Inheritance Tax
In the case of a gift of property or the death of the owner of the property, the transfer would be subject to gift or inheritance tax (Droits de succession).
The tax due would depend on the owners relationship with the donee, the heir’s pre-existing wealth and the value of the property. French law applies to land and buildings situated in France and this states that your estate is divided into two sections:
- Heritary part i.e. the protected part which is reserved for your direct descendants/ascendants (i.e. children/parents but not a spouse). The formula for calculating this part of your estate is complicated and is dependant on the number of descendants you have.
- Disposable part – this is the remainder.
The same tax free bands apply to gifts dependent on the relationship between the donor and the donee. Restrictions as to who can receive a gift of the property do not apply.
In some cases, it is possible to use inheritance planning in order to avoid the liability to French inheritance tax. You should seek professional tax advice in advance of taking any action.
Form Filing Deadlines
The income tax filing deadline for the local French tax returns is 30 April in the year following the year of assessment. The Non-Resident Returns must be filed by Mid May. These dates can vary each year.
Wealth Tax returns are due with local income tax returns.
The above is provided for information purposes. If you require assistance with your French Tax affairs you can contact us here.