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Wealth Tax in France

If you are thinking of buying property in Nice, or have already bought your perfect apartment or villa with Attika, then you may be aware of recent developments in the French Wealth Tax regime. Here is our summary of the changes and what you can expect in the future.

Since he came to office in May 2012, President Hollande has already acted to reverse the ‘softening’ of the wealth tax regime introduced in 2011 by his predecessor Nicolas Sarkozy. Through a Finance Act, his government has reintroduced the previous tax bands and rates applying to households with assets in excess of €1.3 million as at 1st January 2012.

The bands and rates in detail are:

Wealth Tax in France

Wealth Tax in France

However, in line with President Hollande’s pre-election manifesto, the government’s own example figures (see bottom of page) demonstrate that it is the wealthiest French households who will feel the greatest impact.

Once you move to France, you will be classed as a French tax resident and your joint worldwide assets will potentially be assessed for wealth tax. However, the good news is that under the UK/France Double Tax Treaty, assets held outside of France will be excluded from wealth tax assessment for the first five years of your French residency. This will include your UK property and investment capital held outside of France.

Holding investment assets in the UK whilst being a French resident is not usually tax-efficient but you can still benefit from the temporary wealth tax exemption if you move your investment capital to a French tax-compatible jurisdiction such as Luxembourg.

Wealth Tax in France

The government has signalled that there are likely to be further changes to wealth tax rules and calculation criteria announced in its Finance Bill for 2013. However, it should be noted that the exclusions for new French residents incorporated in the UK/France Double Tax Treaty cannot be changed by France on a unilateral basis.

Wealth Tax in France