As non-residents, are you liable to the french wealth tax?
Yes, the « private » non-resident individuals are liable to french wealth tax for their movable and immovable properties located in France (owned directly or indirectly).
Attention: It is always appropriate to refer to the Tax Agreements which may stipulate different disposals. (Contact us to obtain any tax agreement)
Are there exceptions?
Yes, some properties are exempted from the wealth tax. For example:
- Properties used within the framework of a professional activity (main activity),
- Woods, forests and rural properties (with the commitment of doing business),
- Works of art and antiques,
- Industrial or intellectual property rights,
- Income similar to retirement pension,
Peculiarity for non-residents in France: The non-residents are also exempt from wealth tax for their financial investments done in France: demand or fixed-term deposits in euros or foreign currencies, shares, bonds, warrants and securities, life insurance contracts subscribed with French companies…
What is the tax threshold?
In 2017, The wealth tax is due from the moment that the net taxable value of the assets located in France exceed 1,3 Million Euros on 1st January of the taxation year.
Some debts and expenses are deductible, for example: property tax (taxe foncière), local residence tax (taxe d’habitation), income tax, theoretical wealth tax, etc…
Then the following scale is applied:
Even if the taxation threshold is actually at 1,3 Million Euros, the tax scale starts at 800.000 Euros.
Mister Jones has a villa in France, the value of which is of 2,4 Million Euros. In 2014, he paid the local residence tax 1400 Euros and the property tax 2200 Euros.
Net taxable assets = 2.400.000 Euros – 1400 – 2200 = 2.396.400 Euros
Calculation of the theoretical Wealth Tax = (1.300.000 -800.000) x0.5% + (2.396.400 -1.300.000) x 0.7% = 10.175 Euros
Recalculation of the net taxable assets = 2.396.400 – 10.175 = 2.386.225 Euros
Definitive calculation of the Wealth Tax = 10.104 Euros
Are there some tax reliefs or tax cuts which non-residents could benefit from?
Indeed, there are some tips which could allow you reducing your taxation, for example:
- If you rent your property in France (furnished or unfurnished lettings), you can apply a discount rate of 10 to 20 % on property value.
- If you invest in the capital of an unlisted Small or Medium-size Enterprise: tax cut equal to 50% of the invested capital (tax cut limited to 45.000 Euros)
What is the procedure of filling in the forms and paying the wealth tax for a non-resident?
The Wealth Tax must be declared and paid spontaneously by the taxpayer; you will not receive any tax notice.
- If you are liable to income tax in France, the Wealth Tax will be reported on the same declaration: declaration and payment on 16 or 30 June according to your country of residence.
- If you are not liable to income tax in France, the Wealth Tax will have to be declared at the latest on the 15th of July for the European residents and on the 1st of September for the residents domiciled outside of Europe.
Tax authorities’ intervention period, delayed interests and charges
In the event that the tax authorities find out that there is inadequacy in declaration, its intervention period runs until the 31st of December of the third year following the taxation year.
In the absence of declaration, the intervention period of the tax administration runs until the 31st of December of the sixth year following the taxation year.
Late charges :
- 10% of late charges if you declare the tax within less than 30 days after receipt of the tax administration’s formal demand.
- 40% of late charges after this deadline.
Delayed interests: 0,4% of interests for each month of delay.
Trust in professionals: Roche & Cie, a specialist advisor to non-residents
Our team composed by experimented staff (accountants, tax specialists, qualified notary) are accompanying you with the purchase/ the resale, the accounting and fiscal follow-up of your assets in France.
We can help you set up simple and cost-effective solutions to reduce the burden of the French tax system.
Cabinet Roche & Cie, Chartered english speaking accountant in Lyon, France.
Specialist in Real estate and non-résidents taxation.