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Proposed French Wealth Tax changes 1 January 2018

Euro notes in a pile

The draft French budget for 2018 was presented to the French Parliament in September 2017. The budget will work its way through parliamentary assessment before being approved at the end of the year, so changes to the proposal are possible.

Wealth Tax in France will be replaced by Real Estate Tax

We take a look at the main measure affecting expatriates in France are:

Wealth tax (l’impôt sur la fortune) will be replaced by a new Real Estate Tax (impôt sur la fortune immobilière)

The scope of the wealth tax will be scaled back to apply only to real estate. The same tax rates and bands will continue to apply (as per below). Property held by registered professional landlords (LMP) will be exempt.

The tax applies only to real estate held directly by an individual, along with shares in property-owning companies in proportion to the value of the property rights they own wherever the companies or the properties are located.  For example, a property owned in the UK by an expat in France will be included in the calculation.

Savings and investments, including assurance-vie policies will be exempt from this tax.

How Capital Investment vehicles may help expats

If you own or are thinking of buying investment property – it may be worth considering moving the funds into capital investments instead.

The current threshold of €1,300,000 will remain. The wealth tax scaled rates will apply to property, and main homes will still enjoy the 30% abatement. The 30% concession does not apply to second homes and the discount does not ordinarily apply in relation to a property held through a Société Civile Immobilière (SCI).

The rates payable are as follows:

Fraction Taxable                               Rate of Tax

€0 – €800,000                                   0%
€800,000 – €1,300,000                    0.50%
€1,300,000 – €2,570,000                 0.70%
€2,570,000 – €5,000,000                 1%
€5,000,000 – €10,000,000               1.25%
€10,000,000+                                    1.50%

Note: The government also appears to be conceding to parliamentary pressure for the scope of the tax to be widened to include luxury goods, such as yachts, private jets and race horses etc.

By Paul Flintham, Beacon Global Wealth Management

For expert advice contact Jennie Poate:  jennie (@) bgwealthmanagement.net or via the Beacon Global Wealth website

The financial advisers trading under Beacon Wealth Management are members of Nexus Global (IFA Network). Nexus Global is a division within Blacktower Financial Management (International) Limited (BFMI). All approved individual members of Nexus Global are Appointed Representatives of BFMI. BFMI is licensed and regulated by the Gibraltar Financial Services Commission and bound by their rules under licence number FSC00805B.

And the information on this page is intended as an introduction only and is not designed to offer solutions or advice. Beacon Global Wealth Management can accept no responsibility whatsoever for losses incurred by acting on the information on this page.

 

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