Real estate in France: Non-Residents, how can you expect the French Government to tax your capital gains on real estate?
If you wish to sell property located in France, the difference between the sale price and the original purchase price is subject to a ‘real-estate gain tax’ at a rate of 34.5 %.
From the 1st January 2015, a single levy of 19%  relating to income tax, and a second levy of 15.5 % for social contributions (CSG/CRDS), are applied to the capital gains made on real-estate by natural non-resident individuals.
Previously, Articles 8 to 8b of the General French Tax Code stated that a levy of 33.33% relating to income tax was applied to the partners of French companies as well as the shareholders of real-estate investment trusts who had their headquarters outside of the EU or the EEA (including Iceland, Norway and Liechtenstein).
Capital gains made by individuals or companies domiciled in a non-cooperative state or territory (Etat ou territoire non coopératif), as defined in Article 238-0 A of the General French Tax Code , are also subject to the 19% levy as was decided on 29th December 2014 by the Constitutional Council, who considered the levy of 75% on income tax “an undue burden on taxpayers in terms of their ability to pay and contrary to the principle of equality” .
Is your first real-estate sale exempt?
If you sell a building in France for the first time and you live in a Member State of the EU or EEA, you can benefit from an exemption of 150,000 € on the taxable net gain under the following conditions:
- You have been a continuous resident in France for at least 2 years at any time before the sale,
- If you have transferred your tax residency outside of France, only the sales carried out during the 5 years following your departure are eligible. However, there is no applicable deadline if you have had free disposal of the property since the 1st January of the year preceding that of the sale of the building, at the very least.
Please note that this exemption does not apply if you hold the property through a SCI (Société Civile Immobilière).
This is a matter to be followed up on. Here at Maupard we would be more than happy to look into your individual circumstances, to help you make sense of the consequences of this change and work in your favor.
Do not hesitate to contact us via telephone +33 (0) 1 53 93 94 20 or [email protected]. Our team of experts will happily assist you with any queries you might have.
1. Cf. Art. 200 B of the French General Tax Code
2. Cf. Art. 24 of Law n° 2015-1702 of 21st December 2015 of the financing of social security systems for 2016
3. List of the ETNC in 2016: Botswana, Nauru, Brunei, Niue, Guatemala, Marshall Islands, Panama (see the decision of 8th April 2016 amending the decision of 12th February 2010 adopted under the second paragraph of 1 of Article 238-0 A of the French General Tax Code)
4. Cf. Decision n° 2014-708 DC of 29th December 2014 of the Constitutional Council