1 From a tax perspective is French property attractive as an investment?

Yes very much so. Many people have an idea that France has a high tax country but this is untrue. In many instances you’ll see how France is a lower taxing country than the UK and from a tax point of view an attractive place in which to invest in property.

2. How have the Rules changed?

Before 1st January 2004 the gain was calculated by the French resident taxpayer and included in the people’s annual Tax Return Form 2042. There was no charges by the notary on completion and to a certain extent the French Revenue relied on a rough honor system. The notary dealing with the sale deducted 25% of the net gain made by non-resident individuals and 33 1/3 % made by non-resident companies and paid it direct to the French Revenue.

3. What are the new rates?

The rate of Capital Gains Tax (CGT) for both French and non-French residents, is 16% of the net gain. If you are French resident you pay an extra ten percent in French National Insurance making the effective rate 26%. In other words non-resident’s tax rate has been reduced by 9%, which on the face of it should encourage more foreign purchasers in France and will probably drive up prices. Once the 16% has been paid the non-French resident individual taxpayer can have no further French tax liability.

4. Whar are the rates?

If you are not part of the EU community ask these questions:

The rate goes up from 16% to 33.3%. This is still being studied by the Double Tax Treaty, which may improve the position. If you are not an EU resident and plan to buy a French property you need to think about a suitable EU, and probably French, vehicle to buy it in.

5. Those in their old age pension or are an invalid. This applies even if you are a non-resident. This is subject to some fairly detailed conditions set out in the tax code. There are a number of other more detailed exemptions. The main residence exemption which is similar to the UK one.