Income Tax, Inheritance Tax, Wealth Tax

Income tax for individuals whose residence for tax purposes if outside of France

Please find updated information about how to deal with French income tax in case of leaving France, living outside France or returning to France.

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(PDF - 320.8 kb)

Where can I get a Certificate of Residence ?

These forms, necessary to justify your residence abroad, have changed.
You now have to file the form 5000, possibly with one of its annexes:

- 5001 regarding dividends,

- 5002 regarding interests, or

- 5003 regarding royalties.

Please find also the related explanatory notes.

After having filled the forms, you must have them certified by HMRC. Once certified, you will mail the forms to the French paying establishment (your bank, for instance).

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I am considering purchasing a property in France. How much would I have to pay in stamp duties?

Existing buildings: deeds recording transfers of properties are submitted to the single registration formality. They are submitted to a departmental duty rate of 4.50%, a 1.20 % council duty and a 2.37 % collection service fee, which amount in total to 5.8%.

Building lands and newly built properties: purchases of such properties are liable to standard rated real property VAT (20% since the 1st January 2014)). However, purchases of building lands by private individuals in the purpose of building for dwelling are subjected to stamp duties. Sales of buildings are also liable to a reduced departmental duty rate of 0.70 %.

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I own a property in France. How are local taxes (Residence tax and real property tax) worked out?

Residence tax: this tax is due by any person who owns, rents or uses a furnished property. It is calculated by applying the rate set by local governments to the official Land Registry rental value. The residence tax is assessed on a yearly basis. The tax point is January 1st each year and the occupant at that time is liable for the tax. No rebate is granted if the property if the occupant moves out during the year. Non-residents cannot benefit from any base reduction or any relief.

Real property tax: This tax concerns lands and buildings and is assessed on a yearly basis. It is addressed to the person who owned the property on January 1st of each relevant year. New constructions benefit from a two year temporary exemption. The real property tax is also based on the official Land Registry rental value. No rebate is granted if the property is sold during the year.

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WEALTH TAX AND CAPITAL GAINS

I own a property and I hold a bank account and a few investments in France. Am I liable to wealth tax (ISF)?

Persons whose net taxable assets are worth €1.3 million or more (threshold applicable as from 1 January 2019) are liable for property wealth tax (IFI).

The property wealth tax (IFI) has replaced the wealth tax (ISF). The latter is owed in France for years prior to 2018.

Net taxable assets are the amount of assets after deduction of debts.

Your property assets include properties and property rights located in France, stock or shares you hold in property companies that own property in France, stock or shares you hold in property companies owning property in France or abroad in the commensurate amount of the property and rights owned and held in France.

Please note: Persons who have not been resident of France for tax purposes during the previous five calendar years and who transfer, under certain conditions, their tax residence to France during Year Y, are only taxable on their property located in France. These tax arrangements will remain in place until 31/12/Y+5. Thereafter, these persons are taxable under ordinary law conditions.

Please find further information on how and where to file your tax return on the following link: https://www.impots.gouv.fr/portail/international-particulier/questions/how-and-where-do-i-file-returns-and-pay-property-wealth-tax-non

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The total value of my French assets was equal to, or over € 1,300, 000. How is the wealth tax (IFI worked out?

The IFI rates, which are applied to the 1st € of the assets value, are the following:

Net taxable value of assets:

not exceeding 800,000 € : EXEMPT
between 800,000 € & 1,300,000 € : 0,50%
between 1,300,000 € & 2,570,000 € : 0,70%
between 2,570,000 € & 5,000,000 € : 1,00%
between 5,000,000 € & 10,000,000 € : 1,25%
over 10,000,000 € : 1,50%

DETAILS

• If you file a “paper” return, you should send it to the department which handles your tax affairs. Generally speaking, your property wealth tax should be declared and paid to the Individual Tax Department for Non-Residents (SIPNR).

Direction des Impôts des Non-Résidents
SIPNR
10 rue du Centre
TSA 10010
93465 Noisy-le-Grand CEDEX

If you are not a resident of France and you do not file income tax returns, irrespective of the amount of your net taxable assets over and above €1.3 million, you must file a property wealth tax return and its appendices with specific return no. 2042-IFI-COV without income.

If you have French income taxable in France and you are liable for the property wealth tax, you must declare this on return 2042-IFI that can be downloaded from the impots.gouv.fr website by clicking on “Formulaires”.

• If you file your returns online, you can declare your property wealth tax with your income tax return online (check the “fortune immobilière” box in the table at the start of step 3).

Please note: For the 2018 property wealth tax return, taxpayers whose main home has an Internet access and whose 2016 reference taxable income was more than €15,000, must file their return online.

• If you file your return and/or make your payment late in respect of the property wealth tax, this must be done vis-à-vis the Non-Residents Tax Collection Office (RNR)

Direction des Impôts des Non-Résidents
Recette des non-résidents (RNR)
10 rue du Centre
TSA 50014
93465 Noisy-le-Grand CEDEX

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I am considering selling a property I have in France. What would be my tax obligations and how would the capital gain arising from the sale be assessed and taxed?

Sales made by non-residents are liable to capital gain tax (and, from 1st January 2016, to social contributions as well). The capital gain is worked out in the same way as for French nationals.

The capital gains will be subject to a 19% levy irrespective of your country of residence, as well as social levies at 15.5% collected when the deed is submitted to registration duties.

Exemption

Paragraph 2° of II of Article 150 U of the General Tax Code stipulates an exemption for capital gains made on the disposal of an accommodation unit located in France by individuals, who are not residents of France and who are nationals of an EU Member State or of another country party to the Agreement on the European Economic Area (EEA) which has signed a mutual administrative assistance agreement with France to fight tax evasion and tax avoidance.

Civil servants and government officials posted abroad, who are residents of France for tax purposes, are entitled to this exemption.

The exemption does not apply when the property is owned through a legal entity (i.e. a property holding company, SCI).

The exemption is limited to one residence per taxpayer and is capped at €150,000 of taxable net capital gains.

The proportion of the capital gains over €150,000 is taxed under ordinary law conditions.

These arrangements are subject to compliance with the following requirements:

• The seller must have been continuously resident of France for tax purposes for at least two years at any time prior to the sale
• The sale must be made by 31 December of the fifth year following the year when the seller transferred his residence for tax purposes outside France [the sold property’s status since the transfer of tax residence is not taken into account (rented out or free disposal)] or, with no conditions as to time limits when the seller has had free disposal of the property at least since 1 January of the year preceding the sale
• The seller must not have already benefited from this exemption since 1 January 2006

Furthermore, non-residents are not entitled to the exemptions available in the event of sale of the main residence or for the first sale of a property which is not the main residence.

Calculation

The capital gain is worked out in the same way as for French nationals.

Payment and filing

The one-third withholding tax is collected when the deed is submitted for registration (or failing that, within one month of the sale of the property) and when the tax return (2048-IMM) has been filed.

The non-resident seller is not any more required to appoint a professional tax representative or an individual approved by the French Revenue since 1st January 2015.

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INHERITANCE TAX

When I die, would the assets I have in France be submitted to French inheritance tax?

Double taxation issues in matter of death duties are ruled by the Agreement signed on 21st June 1963 between France and the UK.


DETAILS

a. When a deceased person was domiciled abroad, only the French assets are liable to inheritance tax in France. Taxable assets include properties, tangible assets, goodwills, and shares in French companies.

b. No inheritance tax is due on bonds issued by French companies, or the French Government or French local authorities.

c. When a deceased person was domiciled abroad and when the heirs are also domiciled abroad, foreign securities are not submitted to French inheritance tax.

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What are the allowances applicable on a taxable estate? How is inheritance tax worked out?

- Allowances :

PDF - 175.3 kb
(PDF - 175.3 kb)

(clik on the file above for access to the chart)

There is a tax exemption for inheritance between brothers and sisters, when both the three following conditions are existing:
The brother or sister, must be, at the time when death occurs:
- be single, widow, divorced or judicially separated ;
- be over 50 or disabled in such a way that he or she cannot work so as to provide for his or her own needs ;
- have constantly lived with the deceased during the 5 years before death.

inheritance between spouses or civil partners (PACS) is totally exempt from tax

- Rates :

PDF - 4.9 kb
(PDF - 4.9 kb)

(clik on the file above for access to the chart)

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Published on 06/09/2019

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