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French towns rebel over second home tax hike

Local authorities in several towns in France have said that they will refuse to implement new government plans which could see tax on second homes increase by as much as 20 percent.

French towns rebel over second home tax hike
Some southern French towns will not be implementing the 20 percent tax hike on second homes. Photo: Vic Burton/Flickr

Many people with properties in the southern towns of Cannes, Nice and Arcachon will no doubt be breathing a sigh of relief this week after town authorities announced that they would not be imposing the tax hike on secondary properties after all, Europe1 reported.

The move comes in spite of the fact that the number of secondary residences in these towns is much higher than the national average.

The controversial 20 percent surcharge on the existing property tax – known as "taxe d'habitation" – for second homes would be applied to 30 zones across the country including Lyon, Marseille, Bordeaux, the Mediterranean and Atlantic coasts and Paris, where one in six apartments is believed to be a second home.

The plan is to increase the tax in areas where housing is in short supply and prices are high and would only apply to unoccupied homes, which have not been rented out.

The proposal is part of the government's supplementary budget for 2014 and it is estimated that it could bring in €150 million to those communes that apply it.

The French government claims it would also increase the availability of property to let by encouraging owners of second homes to rent them out when not in use rather than leave them empty.

The tax would also be used to raise funds for the affected communities, which would decide for themselves whether to introduce the new levy. It would come into force on 1st January 2015.

Since the tax was announced last week it has provoked angry reactions.

Jean Perrin, president of the National Union of Property Owners, said that real estate in France had become “a lamb to the slaughter”.

“It’s a new craze of this government to tax property," he said. "It is a mistake because it will increase the cost of real estate and punish owners who have worked hard to have a second home and make such an investment. Then they (the government) lie and say that this is to free up housing but that’s a fundamental error.” 

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PROPERTY

The post-Brexit tax rules on selling second-homes in France

British second-home owners in France who want to sell their properties are being warned of an extra layer of administration - and expense - in place since Brexit.

The post-Brexit tax rules on selling second-homes in France

Brits wishing to sell property in France may now need to appoint a représentant fiscal (tax representative) in France in order to properly declare the sale to French tax authorities. 

Who?

This law applies to people who own property in France but do not live here – mostly that would be second-home owners but it could also apply to, for example, anyone who has inherited property.

This requirement has always been the case for non-Europeans such as Americans, Canadians and Australians and now also applies to Britons since the end of the Brexit transition period. People who live in another EU or EEA country are exempt.

The law is based on residency, not nationality. So if, for example, you have your main residence in the UK but have an Irish passport, you would still be covered by this requirement.

Exemptions

As well as EU residency, there are a couple of other exemptions;

  • If you sell your property for less than €150,000
  • If you have owned the property for more than 30 years (in which case the sale is exempt from capital gains tax and social security contributions).

What is a représentant fiscal?

This is simply a representative for tax purposes in France, and the person does not need specific qualifications in law or accountancy.

The following can be appointed:

  • A company or organisation already permanently accredited by the tax authorities;
  • A bank or credit institution operating in France;
  • The buyer of your property, if they are domiciled in France for tax purposes (they do not need to be a French citizen);
  • Any other individual who is domiciled in France for tax purposes (they do not need to be a French citizen) – in this case they will need to be accredited by the local authority;
  • If the property is in Paris, the individual will need to be accredited by the Île-de-France tax authorities – département de Paris-Pôle gestion fiscale Centre-Missions foncières, 6 rue Paganini, 75020 Paris. Tel: 01 53 27 46 45

If you decide to appoint an individual rather than a company as your représentant fiscale, bear in mind that the process can be quite complicated, so it would be better to check that they are confident in dealing with the tax authorities, to ensure that you don’t end up with unfinished business with the tax office.

If you chose a company, they will naturally charge for the service. 

Whichever representative you chose, you will need to provide a dossier of documents relating to the property sale and also confirming that you are a tax resident of a country outside France (tax returns, banking information, for example).

Will you have to pay tax on the proceeds of the sale?

If your main residence is not in France, you have no other income in France and you do not complete the annual French tax declaration you will not usually have to pay tax in France on the proceeds of the sale, provided your total estate is worth less than €1.3 million.

Properties worth more than €1.3million may be liable for the impôt sur la fortune immobilière (property wealth tax).

You will of course have to declare the income from the sale in the country where you are resident and, if applicable, pay capital gains tax.

What about French property taxes?

If you have owned property in France you will have been paying the taxe foncière and taxe d’habitation.

These will cease, but bear in mind that taxe foncière is charged based on who owned the property on January 1st of the relevant tax year. So if you sold your property in February 2022, you will still get a tax bill in autumn 2022 to cover that year. Only the following year will the new owner become liable, unless the sale contract for the property included an agreement to share or split outstanding taxes.

Find more information on the Internationals section of the French tax office website HERE or pay a visit to your local tax office in France. Find your local office by searching ‘Centre des Finances publiques’ plus the name of your commune – tax offices are open to the public on a walk-in basis and the staff are usually friendly and helpful. 

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