FRANCE Law and Practice Contributed by: Antoine Mercier, Myriam Mejdoubi and Gabriel Dalarun, DLA Piper France LLP
Real Estate Wealth Tax (Impôt sur la Fortune Immobilière, IFI) IFI is assessed on the real estate owned directly or indirectly by the taxpayer via companies or collective investment vehicles when it is not allo - cated to the business of the relevant entities to the extent that the value of the taxpayer’s real estate net assets exceeds EUR1.3 million. A limited number of exemptions apply. Subject to tax treaties, non-residents holding corporate securities will henceforth be liable for IFI for the part of the value of such shares cor - responding to real estate. 8.5 Tax Benefits Depreciation If the owner of the property is a company subject to French corporate income tax, depreciation is allowed (on a straight-line basis) on the acquisi - tion value of the buildings, but not the land (gen - erally, at rates between 2% and 5% per year for commercial buildings).
ent company cannot offset the withholding tax in its country of residency). The rate is 75% for dividends paid on a bank account located in a non-co-operative state, or paid or accrued to persons established or domiciled in such a non- co-operative state. Capital Gains Other than usual profits derived by asset deal - ers, profits on the sale of a French property by a non-resident company are subject to a 25% tax in France (the effective rate is 25.83% for corporate taxpayers with a turnover in excess of EUR7,630,000), although certain treaty exemp - tions may apply. Profits on the sale of a property by an individual – resident or non-resident – are subject to a 19% tax, plus 17.2% in social contributions, subject to the provisions of tax treaties as regards non- resident individuals. Furthermore, a progressive 2% to 6% tax applies on real estate capital gains on sales of property. This tax applies both to real estate rights and assets, other than building lands. Allowances increasing with the holding period can be deducted from the taxable gain, leading to a full exemption of individual income tax after 22 years of holding and a full exemption of social contributions after 30 years of holding.
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