French wealth tax ( Impots de Solidatité sur la Fortune or the ISF) is payable by individuals or couples when the value of their net assets totals more than 760 000€ ( approximately £512,000). The sum total includes any assets that are held by children under 18 in a family. Companies are never subject to this although individual shareholders will be.
Individuals who are not domiciled in France will be subject to this tax if their French assets are valued at above 760 000€ on the 1st of January (the beginning of the tax year). Existing debts or taxes on the 1st of January can be offset against assets for tax purposes. For example a loan taken out on a property can be offset, even if this loan is taken out in the UK.
It is important to note that those who run a professional lettings business with a furnished property may be exempt under the professional assets category. They would need to be registered with the Commercial Register and receive more than 23 000€ gross income from the business, representing more than 50% of their professional income for this to apply.

The taxable base comprises the fair market value of the assets owned by the taxpaying household (husband and wife or cohabiting couples) as of the 1st of January.
The rates can vary between 0.55% and 1.80%. The value of the assets less debts will determine the tax basis.

Please note that the percentages and rates mentioned above are based upon the year 2007 and they are subject to change. We strongly advise you to seek advice from a professional tax advisor regarding your personal position with French Wealth Tax.

French inheritance law and tax are likely to apply to those having properties situated in France even if they are domiciled in the UK.
French law has a concept of forced heirship which means that certain relatives (children, parents and now the spouse in exceptional circumstances) are entitled to part of the deceased’s estate. These beneficiaries cannot usually be disinherited.
A Will can be either French or English but must be expertly drawn up so that it will have full effect in any other jurisdiction. It is important to consider that insufficient planning can result in there being a taxable French estate.
It is possible to obtain spouse’s inheritance tax exemption by signing a post-nuptial agreement.

If the forced heirship concept concerns you, then it may be beneficial to purchase the property through a company in order to preserve inheritance flexibility. Shares in a company are deemed to be a moveable asset when the shareholders are non French-domiciled and as such can be passed on according to British law under a British will.

It is essential that you seek the advice of a Notaire or a qualified advisor before the completion of a sale/purchase, it may be in your interest to change your marriage certificate so that have more flexibility over who you can leave your property to. To change your marriage certificate after the purchase can be lengthy and costly.

For more information on inheritance laws in France please contact us or seek advice from your notaire.

There is no capital gains tax to pay on the profits from selling your French Property if you can prove that the property is your principal residence and it is held in your personal name.
If the property is a second home, in addition to a 1000€ nil rate band, there is a 10% tax allowance per year of ownership after the fifth year. Therefore in 15 years’ time the property will be free of Capital Gains Tax.
If you are non French-domiciled but living in a country in the European Union (eg UK residents), the capital gains tax rate in 2007 is 16% on secondary homes in France. If the tax payer is not in the EU then a 33% rate is imposed. For French-domiciled individuals the rate including the social contributions is 26%. This does not apply to developers or trading companies.
The gain is calculated on the difference between the sale price and the original purchase price. In addition to the purchase price certain costs such as home improvements can be deducted (either the real cost or a value of 7.5%). Only home improvements carried out by a registered professional can be taken into account.

After 5 years, the owner can ‘increase’ the original purchase price by 15% to account for improvements and expenses even without justification.

For more information on CGT we advise you to contact a qualified financial body or your notaire. If you would like us to put you in touch with one then please do contact us info@attikainternational.com

This is known as the “Fonds de Roulement” and if you purchase in a copropriété (an apartment block or a villa in a domain with communal facilities) you may have to contribute to this fund which is used to cover exceptional costs such as the emergency repair of a lift, leaki repairs, changing of entrance doorway etc. It is generally a set sum which is due three times per year. The manager of the property will give a breakdown of sums spent once per year and refund any remaining money. When an apartment is sold, the ‘syndicat’ ( property manager) will refund the seller their share of outstanding money remaining in the sinking fund and the purchaser will be expected to contribute this amount back into the fund. The Notaire should let you know how much is owed in advance. However, it is always worth posing the question to the Notaire or the estate agent.

When you sign the final exchange at the Notaire’s office, the seller will have already paid this tax for the whole year ahead. You will therefore be required to refund - on a pro-rata basis - the amount of this yearly tax to the seller. For instance if you sign for a property in June, the Notaire will calculate the value of 6 months’ tax and you will be expected to refund this amount.