FRANCE Law and Practice Contributed by: Antoine Mercier, Myriam Mejdoubi and Gabriel Dalarun, DLA Piper France LLP
Housing Tax Housing tax ( taxe d’habitation ) is due for sec - ondary dwellings by the occupier of the property as of 1 January. Office Tax This is payable yearly by the owner (as of 1 Jan - uary) for premises used as offices or for com - mercial or storage purposes, located in the Ile- de-France and the PACA (Provence-Alpes-Côte d’Azur) region. Office Development Tax Office development tax ( taxe pour la création de bureaux ) is payable by the owner of office prem - ises in the Paris area, with the rates varying from EUR0 to EUR455.75 per square metre depend - ing on the district in which the office is located. Tax on Unoccupied Premises Tax on unoccupied premises, located in certain areas, is due, at the rate of 17% in the first year and 34% thereafter, by the owner of any prem - ises that have been unoccupied for at least one This is payable in relation to building, rebuilding or extension projects for all types of premises. 3% Tax A 3% tax applies to the market value of real estate properties and rights owned in France, directly or indirectly, by any French or foreign legal entity (with exception for some categories of investors). 8.4 Income Tax Withholding for Foreign Investors Rental Income Ownership of a property in France does not itself make it a permanent establishment. year (as of 1 January). Local Development Tax
(b) on the margin if the VAT incurred by the seller on the initial acquisition was not deducted. • Transactions involving new buildings (ie, acquired less than five years after completion from a VAT-liable entity acting as such, and also renovation works completed during the last five years on properties built more than five years ago) are subject to VAT on the total purchase price; • Transactions involving other properties are exempt from VAT (unless an election for VAT to be payable is filed). If the seller is not registered for French VAT, the The sale of shares in a company owning real estate assets (where the value of the real estate represents more than 50% of the company’s assets) is subject to a transfer tax of 5% on the price paid for the shares. If the price of the shares reflects the fair market value of the real estate assets minus the liabili- ties of the company, the transfer taxes are, in principle, lower than those due on the sale of the real estate assets. 8.3 Municipal Taxes Property Tax Property tax ( taxe foncière ) is payable for the whole calendar year by the owner of a property asset as of 1 January of each calendar year. The amount of property tax is calculated by apply - ing the rate of the tax set by each local authority to the cadastral income obtained by applying a reduction of 50% (20% for non-developable lands) to the local rental value ( valeur locative cadastrale ). transaction is not subject to VAT. 8.2 Mitigation of Tax Liability
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