purchasing a french property
IF A VALUABLE PROPERTY IS BEING BOUGHT THEN TAX PLANNING ADVICE IS ESSENTIAL
France has been associated with glamour and wealth for as long as there has been an international jet-set. However, wealthy foreign investors, property purchasers and especially those seeking to become fiscally resident in France are well advised to seek professional guidance from a firm such as the SCF Group BEFORE physically investing in or moving to France. The reason is that not only are French tax residents and (potentially) companies taxed on their worldwide income, but there also exist some of the most sophisticated anti-avoidance provisions in Europe as laid out in the French fiscal code or code general des impots (CGI). In particular, foreign French property purchasers intending to retire to France should be aware of both the ‘forced heirship’ and wealth tax provisions. In the case of forced heirship, this literally penalises those who do not distribute wealth to prescribed family members or in the way desired by the fiscal authorities whilst the wealth tax is an annual tax on on assets, which can become quite punitive.
PROPERTY TAX RATES – BUYING & SELLING
When purchasing a property in France the overall tax burden will involve a number of different taxes and be affected by a number of factors including whether the property is a new or resale property. In the case of the latter then the total costs and taxes will be between 7% to 10% of the purchase price excluding the estate agent fees. In the case of new builds, plus VAT/TVA @ 20% excluding any estate agent fees. As in the case of Spain, subject to various exemptions (the main one being the primary residence exemption), capital gains tax will be payable by a seller of a property with the standard rate being 19%. However, progressive surcharges apply for gains over €50,000.00, starting at 2% and rising to 6% for gains over €260,000.00. Worse still, social charges also apply with the standard rate being 17.2% meaning that technically, without any tax planning advice, the potential tax on a highly appreciating company exposure could be 42.2%. In precis, France is a jurisdiction that requires proper tax planning advice to be given before any purchase/investment including looking at the possibility of using designated property holding companies known as societes civile immobiliere (SCI’s).
INCOME TAX LEVELS 2023
Spain taxes resident individuals on their worldwide income with rates progressively varying from 19% to 47% with the thresholds being:
- Up to €10,777.00 = 0%
- €10,778.00 – €27,478.00 = 11%
- €27,479.00 – €78,570.00 = 30%
- €78,571.00 – €168,994.00 = 41%
- More than €168,994.00 = 45%
WEALTH TAX LEVELS 2023
The French Wealth Tax is an annual tax payable by both residents and, in many instances, also by non-residents. The tax is based upon the net value of ones assets. The tax is progressive with the thresholds being:
- from €1,300,000.00 to €2,570,000.00 = 0.7%
- from €2,571,001.00 to €5,000,000.00 = 1.0%
- from €5,000,001.00 to €10,000,000.00 = 1.25%
- over €10,001,000.00 = 1.5%
PRIORITY ENQUIRY FORM
(Strictly Confidential No Obligation)
SCF Legal & Corporate Management Services Limited
Address: 250 Kings Road, Chelsea, London SW3 5UE
Telephone: 020 7731 2020 Email: enquiries@scfgroup.com
Registration number: 05462416
© SCF INTERNATIONAL 2023
A FULL RANGE OF LEGAL, ACCOUNTANCY & COMPANY MANAGEMENT SERVICES
The SCF International specializes in providing accountancy and management services for UK and Irish limited companies, UK & Irish company management services including the provision of (where necessary) domestic directors, domestic company secretaries, registered office address services, trading offices, value added tax (VAT) registration and management, payroll (Pay as You Earn PAYE), opening up and managing UK or Irish bank account facilities, raising invoices and any and/or all other services required to establish a bone fide managed and controlled UK or Irish limited liability company.
Our in-house team of legally and accountancy qualified experts can also provide advice on current UK & Irish tax laws/provisions including anti-avoidance provisions, EU directives and regulations, the impact of BREXIT for both UK and EU based businesses and other relevant. In addition, where required the SCF Group can also set-up and arrange the management of companies in tax efficient EU based jurisdictions such as Cyprus, Luxembourg or Malta or indeed any jurisdiction in the world including those in the Middle and Far East.
Property de-enveloping services – In conjunction with leading UK firms of solicitors SCF can help transfer companies currently held by what were known as ‘offshore’ companies into either more tax efficient UK companies or directly back into the names of individual beneficial owners’ often without attracting stamp duty land tax (SDLT) but still avoiding the advance tax on enveloped dwellings (ATED).
Our fiscal migration and tax planning department is operated by qualified lawyers and accountants and can advise both domiciled and non-domiciled individuals on how to mitigate their individual and corporate tax exposure be it in the UK or abroad. Our legal & business department can provide specialized advice on all domestic and international tax planning issues but also upon ‘key’ issues such as asset protection be it in the form of trusts and private interest foundations (PIF’s). In particular, SCF can provide advice to those intending to relocate to the UK on how to do so in the most tax efficient way.
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