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Non-resident and own a property in France? Here’s a quick guide to the taxes you will come across.

04.10.22

The French Government website (www.impots.gouv.fr) clearly states that if you are a non-resident, who owns property in France, then you are liable for local taxes and potentially tax on income earned and property wealth tax (IFI).

It also warns “If you live outside France, always check with your local tax authority to find out if you have filing and/or payment obligations in your country of residence, even if you pay taxes in France”.

Cross border taxation is highly complicated, we strongly suggest you seek advice from a specialist accountant/tax advisor. These notes should be treated as a guide only.

So, lets look at those obligations in greater detail:

Local taxes – these are managed by your local tax office. Even though taxe d’habitation is being phased out for residents, it still needs to be paid by second-home owners. It is paid by the owner, or the tenant who is renting the property on a long term basis, on 1st January. In addition, taxe fonciere is a local land ownership tax imposed on the owner – whether or not the property is occupied or rented out.

Tax on income earned – if you are a non-resident and receive income from your French property then you are obliged to declare it and file a tax return in France. Even if the income is negligible. The income is taxable as business profit or BCI (Bénéfices Industriels et Commerciaux).

If your property is unfurnished you are required to declare this revenue in your regular income tax return. If your property is furnished you have two choices. Pay a flat rate 20% up to a threshold of 26,070 euros (net income) and 30% above this or you can have it calculated on your global income, as if you were a French tax resident. Either way, your rental income in France will still be subject to social charges of 7.5% (if you are within the EU, UK or EEA).

Property Wealth Tax (IFA) – Impot sur la Fortune Immobilier is an annual wealth tax on French property. Subject to international tax treaties, you are liable if you have net property assets, in France of 1.3m euros. The tax starts at 0.5% and increases progressively to a maximum of 1.5% for property over 10m euros.

France has signed double taxation agreements with many countries, including the UK and USA. This double taxation agreement should prevent you being taxed twice on the same income. Always take specialist advice from a professional who will help you avoid double taxation, and ensure you remain tax compliant in both countries.

https://www.leggettprestige.com/

Credit: Leggett International Real Estate

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