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Tax
In most countries the taxation principle is that Individuals are taxed in the country where they usually live and are taxed on all their worldwide income.
Most countries also tax property owners on profits they make from their property in the country where the property is located.
Today many countries have “double tax agreements” which means you do not pay tax twice. Such agreements are in place between France and Ireland, UK, US and most EU countries.
The following is a very high level guide to the main taxes associated with property in France. It is not a definitive list and professional advice should be sought before making any decisions.
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1. At the purchase stage
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On the property |
· Registration duties (equivalent to Stamp Duty)
· New property – c.4%
· Second-hand property – c.7% |
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On a French loan
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· Registration duty - c. 2% of loan amount |
2. While you own the property
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Tax fonciere |
· Equivalent to Rates
· Generally not applicable in year’s 1 and 2 for new property
· Paid annually
· c. €1- €1.75 per square metre per month |
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Tax d'Habitation
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· Occupation tax
· Paid by tenant
· Paid annually
· c. €1- €1.75 per square metre per month |
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Wealth tax |
· Applies to values greater than c.€760,000
· Rates are 0.55% rising to 1.8% when value is €15m |
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Income tax |
· Rental income taxed at 25%
· Allowances given for expenses and loan interest
· Double tax agreement with France – only pay tax once |
3. When you dispose of the property
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Selling the property
Capital Gains tax |
· 16% CGT on the gain in France
· Reduces to NIL over 16 years
· Also liable to CGT in the country where you live but you get a credit for any CGT paid in France |
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Death of owner
Inheritance tax |
· Arises on the value of the property owned by the deceased
· Priority of inheritance to blood line relatives
· Possible to pass to wife/husband without tax |
Arranging your affairs
So you minimise your tax liability both now and in the future, particularly with a large investment, it is very important to get professional advice. Oui Can Do work with a number of advisors in France, Ireland and the UK to help you with all your taxation requirements.
Contact us today to discuss how we can help make the structuring of your investment as tax efficient as possible both now and in the future. OuiCanDo@OuiCanDo.com .
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