Recently the new French Government took the seemingly unpopular decision to increase the level of tax. This increase includes taxes relating to Inheritance Tax, Capital Gains Tax, Wealth Tax and Income Tax.
Currently the 2013 Budget is being approved by the Government. The Budget, as proposed, intends to introduce a new amendment regarding Capital Gains Tax and holiday homes in France. At M D Pryke Notary Public we often notarise and legalise documents for Notary clients who are property investors in France and other international countries. If this new amendments is to remain then this will clearly impact on those Notary clients and the notarisation and legalisation services required.
We understand that his amendment is to apply further tax to the gain on sale of the property, if any. This is further tax, which may be viewed as a detirent to property purchases by many, is in addition to the current rate of 34.5%. This means that any capital gain over €100,000 will be taxed at the standard rate of 34.5%. In addition there will be a yet further tax of 3% to pay if the gain is between €100,000 and €150,000. The tax looks likely to go up to 5% for any gain which exceeds €150,000. Crucially this new tax will apply to every nationality and also corporate purchasers. Namely the tax will apply to any vendor whether the person disposing of this property is French or non French resident. This reflects the more recent international theme of ensuring international property investors are captured for tax purposes. Therefore all Notary Public clients buying or selling property in France will be affected.
There is also a suggestion that the Government is willing to considering the introduction of a tax of 5% to be applied on a second home in France. Again, this tax will be internationally neutral applying to French or non French nationals. The good news, if there is some, is that this additional tax will only apply in certain communes in France. In addition it will concern furnished properties that are not affected to main residents on 1 January 2013. This new tax of 5% would be based on the potential rental income that could be generated by the property. Notary client should note that this is the potential rental income not the actual income received, or not received as the case may be.
Matthew Pryke comments, “The introduction of additional taxes is never going to be warmly received. In France, as in the rest of Europe, taxes are being introduced to address the global issue of the economic deficit. At our Notary Public practice we are here to assist Notary clients with purchasing properties abroad and France is often a popular target for British property developers. Whilst additional tax may put some off I believe that France will remain a popular destination for property developers, notaries clients and families wanting second homes.”
For further details of purchasing properties in France please contact Matthew Pryke at M D Pryke Notary Public, a notary public practice in London operated by N Now Limited. This Notary’s practice are experienced experts in providing legalisation and notary services for clients purchasing in France and other countries. For further details please refer to the website at www.mdpryke-notary.com