Am I Liable to Pay French Wealth Tax –
‘Impôt sur la fortune immobilière’ (IFI) ?
The ‘impôt sur la fortune immobilière’ (IFI) is the French wealth tax on an individual’s real estate assets. IFI replaced its precedent, ISF, in January 2018. It is payable by owners of French property, both living in France and abroad, whose real estate assets surpass €1,300,000 as of 1 January in the tax year concerned.
There are a number of considerations to take in to account when assessing whether you are liable for IFI and on which basis, depending on your taxpayer and household status. The following will help you understand how this applies to your circumstances.
If you hold real estate assets in France and are seeking professional valuation advice relating to your tax liabilities under IFI, contact Samuel Thompson at Berthier & Associés via email [email protected] or telephone +44 7933 239126 / +33 7 45 55 81 46 for an English-speaking introduction to the services that can be offered which are tailored to your personal situation.
Taxpayer Status
Whether your tax domicile is in France is determined firstly by French law, but if there is a tax treaty between France and your country of residence, it may include criteria used to establish your tax domicile. This could result in a shared tax liability in both countries. International tax treaties are available to view on the French tax administration’s website: www.impots.gouv.fr. In the event of any uncertainty, it is recommended that you seek professional advice to clarify your situation.
I am registered as a taxpayer in another country but own property or real estate rights in France :
Individuals registered as taxpayers in another country are liable to IFI only on their French real estate assets. This includes shares owned in real estate businesses in France and shares of real estate businesses owning real estate in France and abroad, up to the amount of the property and rights owned in France. In all events, the liability is limited to real estate that is not related to their business activities.
I am registered as a taxpayer in France and own property both in France and overseas :
Those registered as French taxpayers are subject to IFI based on the entirety of their real estate assets, including shares of real estate businesses, whether these are located in France or overseas.
I have recently transferred my tax domicile to France :
A person who has just transferred their tax domicile to France after having been a registered taxpayer abroad for the previous 5 calendar years is only taxed on their real estate assets located in France. This only however applies for 5 years, and after that period they will be liable for IFI on their worldwide property holdings in the same manner as any other French tax resident.
Marital Status
A declaration for IFI takes in to account the real estate holdings of all persons making up a ‘household’. The definition of a household will depend on your personal situation. It is also important to note that the composition of a household for IFI purposes may vary from that for income tax purposes.
I am a single person living alone :
Whether you are single, widowed, divorced or separated, your declaration will include only the real estate assets that you hold.
I am living with someone else as a couple :
Any people living in cohabitation, civil partnership or as a married couple are subject to taxation on the entirety of their joint real estate assets.
I am in the process of separation or divorce with my partner :
Couples in the process of divorce or separation are considered as distinct households providing that they have been authorised to reside separately.
I am married under a separation of property regime :
Couples married under a marriage contract with maintenance of separate property (‘régime de séparation de biens’) are only responsible for IFI for their own assets on the condition that they also live separately.
I have children who possess real estate assets :
Assets belonging to children under the age of 18 for whom the parents have the legal administration of the property must be declared with those of their parents. This can be divided in two equal parts between the parents if they are subject to two separate households for IFI purposes.
Conversely, assets belonging to adult children (18 years or older as of 1 January of that tax year) cannot form part of their parent’s estate, even if they form part of the same household for income tax purposes.
Divorced or separated parents jointly exercising parental authority may each declare half the value of the property of their minor children.
If you are an overseas resident and due to pay French wealth tax under IFI, you may be in disagreement with the French tax authority about the value ascribed to your real estate holdings subject to IFI. For full clarity on the subject, and to ensure that your taxable assets have been properly valued, Berthier & Associés are expertly positioned to assist you. Contact Samuel Thompson for an English-speaking introduction to the valuation services that Berthier & Associés provide via email [email protected] or telephone +44 7933 239126 / +33 7 45 55 81 46.