Individuals - Wealth tax - Taxation

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.  
 

2011 - PRIVATE ASSETS TAX REFORM 

Full exemption up to € 1.3 million as of 2011.

Taxpayers with a net taxable private assets over € 1.3 million must file their wealth tax return by September 30th, 2011. Computation will be made according to the current wealth tax schedule.

Starting 2012, two rates will replace the current tax schecule :

- Taxpayers with net taxable private assets between € 1.3 and 3 million will be taxed at a rate of 0.25% on the whole value of their private assets. However a rebate for assets between € 1.3 and 1.4 million will apply. They will benefit from simplified tax filing obligations.

- Taxpayers with net private assets over € 3 million will be taxed at a rate of 0.5% on the whole value of their private assets. However, a rebate between € 3 and 3.2 million will apply.

The computation of the wealth tax basis will remain the same.

Exemption of professional assets is softened. For example, the minimal 25% shareholding is now fulfilled with voting right only. It is no longer necessary to have both 25% of voting rights and divided rights.

Moreover, the minimum 25% voting rights requirement is softened after a capital increase (conditions apply).

 French tax residents are taxed on the value of their private assets located all over the world when it exceeds, as of January 1st an amount defined yearly.

The capital value of the life interest invested in a “Plan d’Epargne Retraite Populaire” (Saving plan) is now wealth tax exempt.

Private assets are valued at a fair market value as of January 1st of the tax year. Loans contracted for the acquisition of these assets reduce the value. The tax is assessed on the basis of the information mentioned by the tax payer on his tax return (to know about this subject check facts and figures).

The addition of wealth tax and income tax cannot be higher than 85% of the revenues received by the tax payer. If the addition of the two taxes is higher than 85%, the wealth tax is capped within certain limits.

The rebate on the value of the family house amounts 30%.