As was widely expected, the change in government in France has led to various changes to the French tax system, not least to the French wealth tax regime. This has been an area of continual change over the past few years (our previous blog refers), and no doubt will be a concern to individuals owning property in France in particular.
In short, the French government has proposed an exceptional additional wealth tax for 2012, to compensate for the loss resulting from the change in wealth tax rates adopted by the previous government. Those who are liable to will have until 15 November 2012 to pay the additional charge, and to file an additional French wealth tax return. As from 2013, the former wealth tax rates will be re-established.
There is further bad news for non-French resident individuals in the form of additional French social contributions on the real estate capital gains and on French source rental income. This will apply on top of the normal French income tax rates (minimum rate of 20% for non-French residents, maximum 45% for taxable income above €150,000), to which certain capital gains will also become subject from 2013 onwards.
Clearly, this is likely to be unwelcome news for most who are affected. Please contact us if you would like to discuss the likely impact of the changes in more detail.