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This chapter is not exhaustive and is limited to broadly outline the tax consequences of the main events occurring when doing business in France. It does not constitute a tax advice or a client - attorney relationship. Materials are not suitable for tax analysis. Visitors are invited to consult a tax lawyer before taking any decision.
 Non French tax residents owning real estate located in France may be taxed on the tax value of this real property.
However, no taxation applies the year where the individual relocates in France. This taxation may be mitigated/avoided according to the applicable tax treaties.
US tax Court disallowed deduction from US taxes for contribution to a French pension scheme (Requirement under §§ 219 and 518(c)(18) IRC not met) and payment of French real estate taxes (Local benefit instead of General public welfare as required by § 18 of USA-FRANCE tax treaty and § 164 IRC) paid by a French citizen working in the US.
Monegasque SA - Activity not subject to corporate tax in France
French Supreme Administrative Court held that a Monegasque SA not registered in the Register of Commercial Companies in Monaco but in the Register of Civil Companies in Monaco while not carrying profit-making activities in France could not be subject to French corporate income tax even when granting for no consideration the disposal of a real estate complex located in France to its shareholders.
Capital gains on French immovable property
French tax authorities published guidelines on the benefit of the capital gain tax exemption on the sale of a second dwelling by French, EU nationals or nationals of states with which France has a tax treaty containing a non discrimination clause. Exemption is granted when the following tests are met:
- The seller is residing outside France
- The seller was, at any time before the sale, a resident of France for at least 2 consecutive years
- The seller owned the dwelling from January 1st of the year prior the sale
- The sale relates to the sole residence owned by the non-resident individual in France
- The second sale takes place at least 5 years after the first exempted sale of a French residence
French Polynesia, New Caledonia, Wallis and Futuna and the Austral and French Antartic lands are outside the European Union and are also independent from France for tax purpose. The gains derived from the sale of French immovable property by residents of these territories are therefore subject to a 1/3 withholding tax. However, if the property constitutes the principal home in France of non resident EU nationals, the gain may be exempted.
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