French tax changes likely to impact on investors
British individuals who have invested in property in France could be affected by changes to the country’s tax laws once the latest Budget has been debated in parliament.
Although the previously announced plans to do away with the French wealth tax, known as the Impôt de Solidarité sur la Fortune or ISF, have now been scrapped, the payment threshold should increase from €800,000 to €1,300,000. Additionally, there will only be two tax bands – individuals with assets between €1,300,000 and €3,000,000 will pay 0.25 percent, whilst those with greater wealth will pay 0.5 percent.
There is also set to be a new annual tax for non-French residents who own properties but do not rent them out. This would be the equivalent of 20 percent of the notional rental value of the house. However, questions have been raised over whether such a charge would comply with European regulations, and so this proposal may not be implemented.
The French government is also aiming to clarify the rules for properties owned by trusts and for beneficiaries who wish to move to France.
