Tax to apply to French holiday home owners?

Friday, July 06, 2012

Tax to apply to French holiday home owners?

The French government has announced plans to force overseas property owners in the country to pay more tax, as President Francois Hollande attempts to kick start the country's faltering economy.

Under the proposals, due to be implemented at the end of the month, tax on rental income would rise from 20% to 35.5%, applied retrospectively from January 1, and capital gains tax on property sales would rise from 19% to 34.5% . Similar proposals had been mooted by President Sarkozy during his time in office but these were challenged by the British government and were eventually shelved. It is estimated that the legal changes will raise £40 million for the French economy this year.

Approximately 200,000 Brits own a property in France, all of whom will be affected by the new law.

"If the law is introduced, the effective rate of French capital gains tax will almost double for EU residents on their French property capital gains," commented Graeme Perry, a partner at Sykes Anderson, a company which aids British property buyers in their French purchases.

Perry felt that imposing the law would mean that France ran the risk of damaging the property market, "particularly at the higher end".

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