Thursday, 2 February 2012
Gifts to children? Act NOW before its too late
Friday, 22 July 2011
French Property transfer tax increases due
John Kitching warns that Notaire fees have increased as of 23rd February 2011, and there is a further increase against French Property coming into effect from 2012. French Property Transfer tax for transfers between co-owners of French property or on for transfers of French Property on divorce is set to rise from 1.1% to 2.5% as of 1st January 2012. If you are considering a transfer, you had better act fast to avoid the increase. The rate applies as of the date of completion of the transfer deed.
For more information contact John Kitching of French Law Consultancy www.frenchlawconsultancy.com or email john@frenchlawconsultancy.com
Friday, 20 May 2011
French Tax Reforms 2011
French Tax Reforms 2011 - projet du loi de finances 2011 (French Finance Bill)
British owners of French Property should take note of proposed reforms to the French Tax system, especially concerning Inheritance Tax, Gifts, Wealth Tax and Tax Foncière. There are many proposed changes under the French Finance Bill for 2011, and John Kitching, who has been practising in French law for almost 10 years has outlined those that are most likely to affect his British clients. The existing rates for French Inheritance Tax and French Gift Tax can be seen on John Kitching’s previous posts on this blog, and an explanation of French inheritance law is available on www.frenchlawconsultancy.com website. The reforms detailed below are currently only proposals. However, the projet du loi de finances 2011 (French Finance Bill) will be voted on in July and may well take effect. Some of the key proposals are as follows.
French Inheritance Tax and French Gift Tax
The 35% rate of French inheritance tax is to be increased to 40% and the existing 40% rate will be increased to 45%. This is unlikely to affect the majority of estates where there is a spouse and children, as the spouse has a full exemption and children each have an allowance of €159,325 and have a generous sliding scale of tax above that value before reaching the higher rates of tax.
The current survival time for French Lifetime Gifts is 6 years, although it is to revert back to 10 years as was the case several years ago. The time limits will be retrospective and calculated from the date of death. For example, a lifetime gift that has currently passed its 6 year limit could still be assessed for tax under the 10 year rule if the donor dies within ten years of the gift.
Furthermore, French Gift Tax reductions based on the age of the donor are to be abolished, these had been set so that there was a 50% discount if the gift was made by a donor under the age of 70, if they were aged 70 to 80 the discount was reduced to 30%.
Taxe Foncière increase
There are also suggestions of a second Tax Foncière for non resident owners of French property, which will be assessed at 30% of the Cadastral Value of the property as of 1st January 2012. It is not certain whether this will affect British or EU owners.
Wealth Tax
Wealth Tax will become payable on the whole value of assessed wealth where relevant assets exceed €1.3m. The current threshold is €800,000. It is not just the wealth exceeding €1.3m that is assessed for tax, it is the entire €1.3m (and above).
A rather peculiar system of tax discounting has been contrived to allow some leniency to those who only just creep into the Wealth Tax Band, as outlined below.
Wealth Tax bands and rates of tax
The fundamental rates of Wealth tax are:
€1.3m to €3m at 0.25% (on the entire amount)
€3m and over at 0.5% (on the entire amount)
€1.3m to €1.4m leniency
However, if your assets are between €1.3m and €1.4m a reduction applies, calculated as follows:
The wealth tax is calculated at the standard rate (€1.3m x 0.25%) which gives a wealth Tax figure of €3,250. However, the tax is then multiplied by 8, and then reduced by an allowance of €24,500, which gives a Wealth Tax bill of €1,500, a discount of €1,750. As the figures approach the €1.4m figure, there is much less of a discount, with €1.39m returning a tax bill of €3,300 after applying a discount of just €175
€3m to €3.2m leniency
A similar discount applies where assets stray into the €3m bracket. Where taxable assets are between €3m and €3.2m, the tax rate of 0.5% applies, the tax is then multiplied by 8.5 and an allowance of €150,000 is applied.
John Kitching is a bilingual Solicitor and has been practising in French law and estates for almost 10 years. John acts as a Consultant Solicitor to many firms of Solicitors and Notaries Public when they need his expertise, and also helps individuals on a freelance basis.
email: info@frenchlawconsultancy.com
Tuesday, 11 January 2011
French Capital Gains tax 2011
French Capital Gains tax 2011
A new increased rate of 19% has been introduced for 2011 for French Capital Gains tax. This rate applies to non-French residents of EU who dispose of French Property, and is applicable for completions as of 1 January 2011. French tax residents pay an additional social tax of 12.3% on top of the increased French Capital Gains tax rate of 19%.
As was the case prior to 2011, French property is exempt from French Capital Gains tax after 15 years of ownership, although UK tax residents would need to declare any gain in the UK and may still face UK capital gains tax.
French Capital gains tax is payable in full during the first five years of ownership, and then each full year of ownership after the fifth year attracts a reduction of 10% per year (resulting in a full exemption after 15 years). Like in the UK, there is a primary property exemption for French Capital Gains tax, although as the French Property property must be your primary residence, this exemption is generally only available to French residents.
For any queries, please contact John Kitching on info@frenchlawconsultancy.com John is a qualified Solicitor specialised in French law and estates. For further information on French law, please visit the French Law Consultancy website www.frenchlawconsultancy.com
Friday, 7 January 2011
French Inheritance tax rates 2011 confirmed
Relationship | 2011exemption | Tax rate on excess |
Spouse/PACS (lifetime Gift ) | 80724 € | |
Spouse / PACS (inheritance) | Exempt | Exempt |
Children / parents | 159325 € | 5% to 40% |
Grandchildren | 31865 € | |
Great Grandchildren | 5310 € | |
Siblings | 15932 € | 24430€ at 35% then at 45% |
Nieces/nephews | 7967 € | 55% |
General for others | 1594 € | 60% |
Monday, 3 January 2011
French Inheritance tax rates 2011 (TBC)
French Inheritance tax rates 2011 – anticipated rates
Relationship | 2011 estimated exemption | Tax rate on excess |
Spouse/PACS (lifetime Gift ) | 80724 € | |
Spouse / PACS (inheritance) | Exempt | Exempt |
Children / parents | 159325 € | 5% to 40% |
Grandchildren | 31865 € | |
Great Grandchildren | 5310 € | |
Siblings | 15932 € | 24430€ at 35% then at 45% |
Nieces/nephews | 7967 € | 55% |
General for others | 1594 € | 60% |
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Thursday, 25 November 2010
French property market still rising
In the Paris area, the number of sales for the 3rd trimester has increased by 23% year on year, and in France generally the market activity is broadly back to where it was prior to the financial crisis.
Property prices in Paris Ile-de-France continue to rise, with prices up over 10% year on year, and up 4.1% over the three months to September.
Is it time to invest before prices go up further?
Should you make an offer on a property and need the contract promptly checking before paying a deposit and before signing it, please contact French Law Consultancy www.frenchlawconsultancy.com