Explained: changes to French wealth tax

Explained: changes to French wealth tax

New wealth tax laws came into effect on 1 January 2018 which could save you money on your tax bill. A tax expert explains the changes to the law and what they mean for you

Written by Rob Kay, senior partner at Blevins Franks

Wealth tax has been an additional, and unpopular, tax in France. For those resident in France, it was an annual tax on their total worldwide assets (property, savings and investments, jewellery, cars, etc) if the total value was over €1,300,000.

Now, from January 2018, the old wealth tax will be abolished and replaced by a new one, this time only on real estate.

Any household resident in France on 1 January with worldwide property worth €1,300,000 or more is liable for this new property wealth tax, l’impôt sur la fortune immobilière (IFI). Non-residents are only liable on property in France.

The rates are:

Real estate value under €800,000 – 0% tax rate

Real estate value €800,001 to €1,300,000 – 0.5% tax rate

Real estate value €1,300,001 to €2,570,000 – 0.7% tax rate

Real estate value €2,570,001 to €5,000,000 – 1% tax rate

Real estate value €5,000,001 to €10,000,000 – 1.25% tax rate

Real estate value €10,000,000 upwards – 1.5% tax rate

The market value of your main home can be reduced by 30%, provided you are living in it.

For wealth tax purposes it is the market value of the property that is used. There is no legal definition, but it is often referred to as the ‘price the seller could be expected to achieve if the property was on the open market and sold as at 1 January in the year in question’.

So, provided there are no last-minute unexpected changes in the budget, from 2018 your savings and investments, including assurance-vie policies, are no longer subject to any form of wealth tax in France.

More articles you might be interested in:

Guide to French taxes

10 French tax residency myths debunked

All you need to know about the PAYE tax system in France

Completing your French income tax return

What is taxe foncière and do I have to pay it?

What is taxe d’habitation and do I have to pay it?

*The 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; an individual is advised to seek personalied advice.

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