FINANCE LAW 2011 - TAX CHANGES (PART 2)

The following changes in tax rates and allowances have been introduced following the Finance Law for 2011.

Capital Gains Tax:

The rate of Capital Gains Tax (CGT) on the sale of a second home by an EU resident is now 19%.

The rate of CGT on the sale of a second home by non-EU residents remains 33.33%.

The rate of CGT on the sale of a second home by a French resident is now also 19%. In addition, the French resident pays social security contributions (CSG/CRDS) now totaling 12.3%, meaning a total liability for French residents on the sale of a second home of 31.3%.

The total exoneration of CGT upon the sale of the principal residence remains, as does the tapered relief on second homes of 10% per annum applicable after the first 5 years of ownership, leading to total exoneration after 15 years.

Non-French residents citizens of the EU can now only benefit once from the exoneration upon sale of their second residence that is not rented in the year of sale who have at any time in the past been French residents for two years or more. The previous amendment allowing a second exoneration 5 years of the sale of the first property exonerated under this rule has been revoked.

Wealth Tax

The threshold above which wealth tax becomes payable has been raised to 800,000 Euros. The sliding scale upon which wealth tax is payable is as follows:

Between 800,000 Euros and 1,310,000 Euros 0.55%
Between 1,310,000 Euros and 2,570,000 Euros 0.75%
Between 2,570,000 Euros and 4,040,000 Euros 1%
Between 4,040,000 Euros and 7,710,000 Euros 1.3%
Between 7,710,000 Euros and 16,790,000 Euros 1.65%
Above 16,790,000 Euros 1.8%