France Tightens Fiscal Screw On Second Homes

By Editorial 30 May, 2011

The French government’s plans to impose an annual tax on the secondary residences of non-residents and expatriates have been met with both criticism and scepticism.

As part of its proposed reform of wealth taxation in France, the government recently unveiled plans to levy an annual 20% tax on the rental or cadastral value of a property held by a non-resident or expatriate either directly or indirectly.

Eager to compensate for the shortfall in fiscal revenues arising from wealth tax reform, and to win back vital votes for French President Nicolas Sarkozy, the government justified the proposed new levy by emphasizing that such property owners do not currently contribute to national public services in France.

Yet opponents of the tax have warned that the plans will simply prove too costly for non-residents, and will merely serve to adversely affect property purchases by foreigners, and to discourage foreigners from investing and creating jobs in France.

Given that the number and value of property purchases in France by foreigners are far from negligible, and that non-resident property owners are already subject to both land tax (la tax foncière) and dwelling tax (la taxe d’habitation), the plans are likely to prove highly unpopular.

Moreover, in view of the fact that the proposed tax clearly discriminates against foreign owners of French holiday homes, it seems likely that the measure will be challenged in the European courts.

The French government’s proposed new tax is provided for in the country’s supplementary finance bill.

A comprehensive report in our Intelligence Report series dealing with the issues raised by international property investment, and the possible taxation implications raised by such purchases, with an account of the likely (and some less obvious) potential countries for your consideration, is available in the Lowtax Library at and a description of the report can be seen at

Tags: Individuals | Expatriates | Tax | Investment | Real-estate Investment | Property Tax | Real-estate | Retirement | France | Tax Reform |


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