Property Taxes in France

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French Property Tax Overview

Under the French tax system, non-residents are taxed on income arising from French sources only and are liable to a number of property related taxes highlighted below.

Individuals living in France for more than 183 days in a calendar year are treated as French residents for tax purposes. If your centre of economic interest (business) is located in France you will also be deemed resident for tax purposes (domicile fiscal) in France.

Tax Identification Number

A French tax ID number is required if you are in receipt of rental income as you will be required to submit a tax declaration with the French tax authorities.

You are not required to apply for a carte vitale if you are not living in France permanently or if you are not working in France.

Taxes on Buying a Property in France

  • French Land Registry fees – payable at average of 0.615%.

Additional taxes such as:

  • communal tax, departmental tax and levies are also payable.
  • Total fees including land registry fees - 5.09% of the property value.

The VAT (TVA) rate in France is 19.6% on property related purchases. French VAT can be refunded under the Leaseback scheme in certain circumstances. TVA is payable at 5.5% on applicable rents.

Ongoing Property Taxes Payable in France

A French Rental Income tax return must be filed with the French tax authorities by the 30th June, the year after income was first received.

French income tax is payable on income arising in France. For non-resident individuals, French income tax is payable at progressive rates on income after allowable deductions for expenses incurred in connection with letting or maintaining the property.

French leaseback, SCI, furnished and unfurnished properties are treated differently for tax purposes.

Furnished property is treated as a Commercial entity for taxation purposes in France.

Non-residents can choose which method of taxation they choose.

Where income is less than €32,000 a deduction of 50% (71% for 2008 and previous years income) of costs is allowable in arriving at taxable income and net income is levied at 20% under the Micro Regime system.

For income greater than €32,000, or where you choose to opt out of the simplified scheme, tax is calculated on an actual receipts/costs basis and gross income is levied at 20% (Regime Simplifie d'imposition)

Unfurnished property is taxed on income less allowable expenses under the Regime reel des revenues Fonciers which is regarded as Non-Commercial property.

Non-residents can benefit from a simplified scheme known as the Regime du Micro Foncier – where income is less than €15,000, a deduction of 30% for related costs is permitted in arriving at taxable income which is levied at a flat rate of 20%.

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French Tax Filing Deadlines

April 30th (year after income was first received) - Leaseback & Furnished Lettings, Corporate Income & VAT Returns - 30th of June (year after income was first received) - Personal income tax returns, Micro-Regimes (Micro-BIC & Micro-Fonciere,) Unfurnished income tax returns

French Wealth Tax

French Wealth Tax is payable on the net is applicable on the gross asset value in France is in excess of €790,000 as at January 1st 2010 (€790,000 for 2009 and €780,000 for 2008). Non-residents are liable to French Wealth Tax.

Local Property Taxes in France

Local property taxes vary from location to location and are charged based on the rate value of the property:

  • 1. Taxe d’Habitation – paid by the occupant/tenant of the property if rented on a long term (1 year) lease.
    Otherwise paid by owner.
  • 2. Taxe Fonciere – in most instances will be paid by the owner of the property (though it can be arranged to
    be paid by occupant/tenant). It includes tax on land/buildings. Allowance available depending on property type
    of between 20% and 50%.
  • 3. Ordures Menageres – annual local tax charged separately for refuse collection.

The French Leaseback property scheme was established by the French Government to incentivise both developers and the purchasers by offering VAT rebates and tax advantages. The aim of the scheme was to encourage development in tourist regions to expand and improve the accommodation available to tourists.

Property bought through the French leaseback scheme involves an agreement between the purchaser and a management company where the management company will lease the property for a defined period of usually 9-11 years. Qualifying properties allow the purchaser to reclaim 19.6% VAT from the purchase price. As a leaseback property is liable to VAT and which is subsequently charged to tenants at a rate of 5.5% the owner must submit annual corporate income and VAT and personal income returns.

The following French taxes may also apply:

French Capital Gains Tax (CGT)

16% of the taxable gain of the property if the seller is resident within the EU or 33% if resident outside the EU. A reduction factor of 10% is applied for each year that the property is owned for the first 5 years. There is no French CGT to pay if you own the property for more than 15 years but you still may be liable to CGT in your resident country.

French Inheritance Tax (IHT)

The rate of IHT payable in France varies considerably and is dependent on a number of factors including – the relationship between the donor / deceased & the beneficiary, the amount to be inherited and the number of children. French IHT is payable by non-residents in France.

Property Tax International specialise in the preparation and filing of French income tax returns for non-resident property owners.

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