Who is concerned?
In France, you are liable for wealth tax if the net value of your real estate assets exceeds €1.3 million.
French residents: persons domiciled in France for tax purposes must declare their assets located in France and abroad.
Impatriate” temporary exemption: new impatriates benefit from an exemption on their real estate located abroad until the end of the 5th year following their installation in France.
Non-residents: For non-residents, the wealth tax will only apply to their real estate located in France.
The tax base consists of all property, property rights, shares or company shares held by the taxpayer and up to the representative fraction of real estate.
Taxable assets are reported at their market value (market value).
Main residence: French residents benefit from a 30% allowance on their main residence.
Professional property: real estate necessary for the taxpayer’s main professional activity is exempt from wealth tax.
Wood and forests: wood and forests benefit from a partial exemption of 75%.
General principles: in general, debts existing on January 1 of the tax year relating to the acquisition of the property, repair, maintenance, improvement, construction, reconstruction or expansion expenses are deductible.
Tax debts: property tax, housing tax, and wealth tax itself is deductible for the calculation of the tax base.
Bank loans and debts: Bank loans and debts are deductible if they relate to the acquisition and other expenses of repair, maintenance, improvement, etc….
However, adjustments have been made by the Finance Act for 2018. The law introduced a limitation on the deductibility of loans “in fine” and loans contracted in the family environment. Finally, a general ceiling on debts has been put in place when the value of taxable assets exceeds €5 million.
Reporting schedule and procedures
The IFI is calculated on the net taxable value by applying the following progressive scale:
|Wealth tax scale in France|
|Portion of the net taxable value of the assets||Applicable rate|
|Up to 800 000 €||0 %|
|Between 800 001 € and 1 300 000 €||0,50 %|
|Between 1 300 001 € and 2 570 000 €||0,7 %|
|Between 2 570 001 € and 5 000 000 €||1 %|
|Between 5 000 001 € and 10 000 000 €||1,25 %|
|Greater than 10 000 000 €||1,5 %|
The wealth tax return must be drawn up on the initiative of the debtor if he considers that the net value of his assets exceeds the tax threshold of €1.3 million.
The declaration must be made before June 15. Thereafter, a tax notice is sent to the taxpayer at the end of the summer (payment deadline set at mid-September).
For more details, do not hesitate to read our detailed article here : https://www.cabinet-roche.com/en/ifi-all-about-the-wealth-tax-reform-in-france/