The wealth tax in France is levied on individuals’ assets . It is paid by tax households whose taxable assets exceed a threshold set by law, which is fixed at €1,300,000.
Are foreigners and non-residents subject to this tax ?
Yes, the private non-resident individuals are liable to French wealth tax for their movable and immovable properties located in France (owned directly or indirectly), unless a tax agreement stipulates otherwise.
However, some properties are exempted from the wealth tax. For example:
– Properties used within the framework of a professional activity (main activity),
– Woods, forests and rural properties (with the commitment of doing business),
– Works of art and antiques,
– Industrial or intellectual property rights,
– Income similar to retirement pension,
Note that non-residents are also exempt from the ISF for their financial investments done in France: demand or fixed-term deposits in euros or foreign currencies, shares, bonds, warrants and securities, life insurance contracts subscribed with French companies…
In 2017, the wealth tax is due from the moment that the net taxable value of the assets located in France exceed €1.3 Million on 1st January of the taxation year.
Depending on the value of the property there is a sliding scale applied to the tax demand, shown in the table below.
If a property is financed or not fully owned by the resident up to an amount under the threshold then there is no tax to pay.
|Fraction Taxable||Rate of Tax|
|€0 – €800,000||0%|
|€800,000 - €1,300,000||0.50%|
|€1,300,000 - €2,570,000||0.70%|
|€2,570,000 – €5,000,000||1%|
|€5,000,000 – €10,000,000||1.25%|
Some debts and expenses are deductible from the evaluation of the threshold, for example: property tax (taxe foncière), local residence tax (taxe d’habitation), income tax, etc…
Mister Paul owns a villa in St Tropez, the value of which is of €2.4 million. In 2014, he paid the local residence tax €1400 and the property tax €2200.
Net taxable assets = €2,400,000 – €1,400 – €2,200 = 2.396.400 Euros.
Calculation of the theoretical Wealth Tax = (€1,300,000 -€800,000) x 0.5% + (€2,396,400 -€1,300,000) x 0.7% = €10.175
Recalculation of the net taxable assets = €2,396,400 – €10,175 = €2,386,225.
Final calculation of the Wealth Tax = €10.104
There are some tips and tax reliefs which could allow you to reduce your taxation as a non-resident:
– In the case that you rent your property, you will be able to apply a discount rate of 10 to 20 % on property value.
– In the case that you invest in the capital of an unlisted small or medium-size enterprise, tax cut equal to 50% of the invested capital (tax cut limited to €45,000).
The French Wealth Tax must be declared and paid spontaneously by the 15th July for the European residents and on the 1st of September for the residents domiciled outside of Europe.
In the event that the French tax administration finds out that there is inadequacy in declaration, its intervention period runs until the 31st of December of the third year following the taxation year.
In the absence of declaration, the intervention period of the tax administration runs until the 31st of December of the sixth year following the taxation year.
In the case that you file your taxes late, you will be charged for the following :
– 10% of late charges if you declare the tax within 30 days after receipt of the tax administration’s formal demand.
– 40% of late charges after this deadline.
Delayed interests: 0.4% of interest for each month of delay.
Because of the complexity of the tax system in France, we advise you to contact a professional for the best, simple and cost-effective solutions to reduce the burden of the French tax.
Visit http://www.cabinet-roche.com/en/ .