New Surprise Tax On French Holiday Homes!

13.05.11

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The French Finance Bill containing the wealth tax reforms has just been presented to parliament ? and it contained an unwelcome surprise for owners of holiday homes in France. If you

The French Finance Bill containing the wealth tax reforms has just been presented to parliament ? and it contained an unwelcome surprise for owners of holiday homes in France.

If you are not tax resident in France but own a holiday home here, under the proposals to be debated in parliament you will start to pay a new extra tax on it from 2012, over and above your taxe fonci?e.

The tax will be 20% of the cadastral rental value, even though you keep the house for your own use and do not rent it out. This is the same notional rental value that is used to calculate your taxe fonci?e.

The government justifies the new tax by saying that holiday home owners should contribute towards national services and infrastructure since they benefit from them when they are in France.

The tax does not just target foreign property owners as French nationals who live abroad and retain property in France will also be liable. However there is a temporary exception for people who leave France and who have paid French taxes as residents of France for 3 years out of the previous 10. These individuals will have a 6 year exemption from this tax, and those who are overseas for professional reasons will not be affected.

The proposal will be voted on in July.

13th May 2011

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.

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