Proposed French Wealth Tax Changes from 1st of January 2018

Proposed changes to the French wealth tax as of January 2018.

Draft French Budget for 2018

The draft French budget for 2018 was presented to the French Parliament on 27th September 2017. The budget will now go through the parliamentary process before being approved at the end of the year, so changes are possible.

Below is a summary of the main measure affecting expatriates in France concerning the French Wealth Tax.

Wealth Tax (L’impôt sur la fortune)

The Wealth Tax will be replaced by a new tax called the Real Estate Tax (Impôt sur la fortune immobilière).

Key Changes:

The new Real Estate Tax will only apply to real estate, scaling back the scope of the existing wealth tax.
The same tax rates and bands will continue to apply (detailed below).
Property held by registered professional landlords (LMP) will be exempt.

The tax applies to:

Real estate held directly by the individual.
Shares in property-owning companies, based on the proportion of property rights they own, regardless of the location of the properties (e.g., a property owned in the UK will be included).

Exemptions:

Savings and investments, including assurance-vie policies, will be exempt from this tax.

If you own or are considering buying investment property, it may be worthwhile to consider moving funds into capital investments instead.

Wealth Tax Threshold and Rates

The threshold of €1,300,000 remains unchanged.
The wealth tax scaled rates will apply to property.
Main homes will continue to enjoy a 30% abatement.
- Note: This 30% concession does not apply to second homes or properties held through a Société Civile Immobilière (SCI).

Rates Payable:

€0 – €800,000: 0%
€800,000 – €1,300,000: 0.50%
€1,300,000 – €2,570,000: 0.70%
€2,570,000 – €5,000,000: 1%
€5,000,000 – €10,000,000: 1.25%
€10,000,000+: 1.50%

Additional Considerations

There are indications that the government may be conceding to parliamentary pressure to expand the scope of the tax. This could potentially include luxury goods such as:

Yachts
Private jets
Racehorses, etc.

Our Private Client Engagement Process

We follow a structured and personalised approach to ensure your family's international wealth is managed with precision and clarity.

Initial Discovery Call

Before you engage us, we’ll get to know you to make sure we’re a good fit in terms of understanding what is most important to you.

Confirming Our Understanding

After our discovery call, we will summarise our understanding of your current situation and the key objectives which will ensure we're aligned with your goals.

Create A Personalised Plan With You

Once you’re happy that we’re right for you, we’ll provide our recommendations and implement them for you. But there’s never any pressure from us to proceed – that’s just not our style.

Implementation and Monitoring

We will implement your plan, constantly monitor and report on the performance to ensure your private wealth is optimised and aligned with your goals and working for you. Additionally, we’ll provide you with regular statements and a half yearly review to ensure that you remain up to date with any investment or tax changes and that we continue deliver for the long term.

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