Roche & Cie

ISF 2016: the conditions for exemption of professional property

02 May 2016

If business property are in principle exempt from wealth tax, they must meet certain requirements to evade taxes. Focus on the rules to follow.

Business property are in principle exempt from wealth tax. But this requires respect, on January 1 of the tax year, relatively strict conditions. Moreover, the determination of the professional nature of certain goods is questionable and an error of assessment can be costly: the Tax Administration has a 6-year action period if the property was not declared; That is potentially 7 statements EWB. “Please note, companies whose business is the management of their own movable or immovable assets can not be professional property … and are therefore taxable,” says Isabelle Emin, a partner at FIDAL.

Which is expressly excluded

Are specifically excluded from the base of the wealth tax :

  • The property belonging to an individual farm and needed to exercise, primarily, of an industrial, commercial, craft, agricultural or liberal, by one of the declarant. This therefore includes professional assets, such as goodwill, buildings used in operations, inventory or, for freelancers, clients, shares of SCM or clinic … In contrast, corporate securities, even on the balance sheet, are the personal property of the operator and the professionalism is assessed in the light of the latter. The profession must be exercised and usual profit basis and constitute most of the economic activities of the taxpayer.
  • People partnership units under the income tax: in the categories BIC, BA and BNC but requires that the holder exercises in society his professional activity, primarily and effectively.
  • Companies subject to tax shares of companies, but it must have a minimum 25% direct or indirect, via the members of the family group of the debtor or through a company (except when the investment exceeds 50 % of the gross value of their taxable property). It also requires that the taxpayer carries one of the eligible executive functions and this function. And it must be his main activity, result in a normal return, corresponding to more than half of the professional income of the debtor.

Source: Les Echos