30 Finance Monthly Taxation Awards 2024. FRANCE rental value of the property). In this case, it would be more tax-efficient to purchase the property in your own name. Besides, if it is contemplated to purchase a French real estate property through a non-French structure, we strongly suggest performing an analysis of the French tax consequences of such structuring. Indeed, certain types of foreign entities would be assimilated into pass-through entities and others into corporations with different French tax consequences in both situations. • The potential consequences of the interposition of a structure between the individual and the property regarding the law applicable to his/her Estate. The holding of a French real estate property triggers the following tax consequences: • The purchase of a French real estate property triggers the payment of registration duties and notary fees at a rate of roughly 7% computed on the purchase price. • The value of the property or the shares of the company owning the property are subject to a French real estate wealth tax provided that the net fair market value exceeds €1.3m, which is computed on the value which exceeds € 800k. The tax brackets range from 0.5% (starting € 800k) to 1.5% (above €10m). A French real estate wealth tax return has to be filed every year, the purpose of which is to report the fair market value of the property as of 1 January of each relevant year. • The holding of a French real estate property also triggers the payment of an annual property tax and an annual housing tax, the rate of which being voted each year by the local authorities. In order to obtain the amount of the housing and property tax to be expected, it is necessary to ask to the current owner of the property the amount of tax he/she was liable to. • In case of resale of the property, France levies real estate capital gain tax at the rate of 36.2% (19% of income tax and 17.2% of social contributions). The capital gain is computed by the difference between the sale price and the purchase price (increased by the cost of certain works made on the property and certain acquisition costs; fixed allowances also apply in certain circumstances). The capital gain is reduced by allowances for the duration of ownership, leading to an exemption of French income tax after 22 years of ownership and an exemption of social contributions after 30 years of ownership. • In case the property is held through a foreign company, it will also be necessary to file every year a 3% tax return in order to avoid being held liable of an annual 3% tax computed on the fair market value of the property as at 1 January of each relevant years. When advising high-net-worth individuals on tax-efficient investments, how do you tailor your strategies to their specific financial circumstances? Advising high-net-worth individuals in France means ensuring the customized solutions will not trigger any short or long-term tax risks. Our role consists of a 360° view to anticipate the most relevant solution to their expectations without any penal risk. Once again, in 2024, tax optimization in France and lack of compliance of more than 100K euros mean criminal prosecution. We ensure our clients can sleep soundly.
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