SUMMARY OF FRENCH TAX CHANGES IN 2012 - PART 2

WEALTH TAX ('ISF')

From 2012, there will only be two rates:

-For assets of which the net value is between 1,300,000 Euros (One million three hundred thousand Euros) and 3,000,000 (Three million Euros) a rate of 0.25% is applied to the totality

-For assets of which the net value is above 3,000,000 Euros (Three million Euros), a rate of 0.5% is applied to the totality

As a result, those tax payers whose assets are valued between 800,000 Euros (Eight hundred thousand Euros) and 1,300,000 Euros (One million three hundred thousand Euros) no longer pay wealth tax.

INHERITANCE TAX

 

As of 31st July 2011, the inheritance tax sliding scales have been modified. The modifications essentially concern the raising of the top rate from 40% to 45% for inheritance or gifts between ascendants or descendants, as well as for lifetime (inter vivos) gifts between spouses or PACS partners.

Direct line succession or donation (ascendants or descendants), fraction of the net taxable amount

Taxable amount after tax-free allowance

Rate

Below 8,072 €   

5%

Between 8,072 € and 12,109 €    

10%

Between 12,109 € and 15,932 €   

15%

Between 15,932 € and 552,324 €

20%

Between 552,324 € and 902,838 €   

30%

Between 902,838 €  and 1,805,677 €

40%

Above 1,805.677 €

45%

Gifts between spouses or 'PACS' partners, fraction of the net taxable amount

Taxable amount after tax-free allowance

Rate

Below 8,072 €   

5%

Between 8,072 € and 12,109 €    

10%

Between 12,109 € and 15,932 €   

15%

Between 15,932 € and 552,324 €

20%

Between 552,324 € and 902,838 €   

30%

Between 902,838 €  and 1,805,677 €

40%

Above 1,805.677 €

45%

The tax-free allowances remain the same as a result of the temporary freezing of inflation related indexation. The principal tax-free allowances are as follows:

 

-Between ascendants and descendants:    159,325 €

-Between brothers and sisters:                15,932 €

         (Above this, tax at 35% on the first 24,430 €, then at 45%)

-Between relatives to 5th degree:            1,594 €

         (Tax rate of 55%)

-Between non-relatives:                         1,594 €

         (Tax rate of 60%)

-Inter vivos gifts between spouses and PACS partners: 80,724 €

Other gift tax saving measures linked to the age of the donor have been removed, save concerning company shares.

In addition, the period of time following which a beneficiary would be entitled to a second tax-free allowance (another gift or an inheritance following an earlier gift), has been increased from 6 to 10 years. A system of tapering applies to existing gifts to mitigate the impact of this reform somewhat.

Our Picks
Tucked away in the countryside, yet just over 5 minutes from two villages with all amenities, this stone farmhouse has been beautifully renovated and extended to offer comfortable living with all modern household conveniences. The dwelling of approx. 210 m² habitable surface area comprises 5 bedrooms and 4 bathrooms as well as a bright and spacious living room of 39 m², a good sized fully fitted kitchen of 27 m², both with access to terraces facing respectively East and South, and a study. A stunning walled in pool area with quality terrace surround and covered entertainment area has recently been completed. The property comes with approx. 5 acres of land, ideal for horses for instance and an outbuilding housing a workshop, utility room and woodshed. From all sides of the property, there are lovely views of the rolling hills.  
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This 16th century château replete with historical elements and features is situated in the countryside under 5 minutes to a village with amenities. Approached via a courtyard, the dwelling, of approx. 564 m², comprises 8 bedrooms, including a fantastic round bedroom with domed roof in the watch tower, dining room, living room of 53 m² on the ground floor and a grand reception room with stone fireplace, mezzanine and exposed beams of 63 m² on the first floor, utility rooms, vaulted cellars and kitchen. In addition, on the second floor and the third floor of the tower there are a further 97 m² to be renovated to provide additional living space. The oldest part of the château dates from circa 1530. Historical elements and features include two stone spiral staircases, remarkable triangular red floor-tiles, stained glass windows and hagioscope. Former chapel of 72 m², 'pigeonnier' of 32 m². Central heating fired by wood pellets (boiler fed by a 7 t silo). Hot water production via solar panels. Swimming pool (10x5). Land consisting of garden, orchard, woods and pasture with mature trees of approx. 36,425 m². Additional land of 1.6 ha available to purchase separately. Dry moat protecting the watch tower. Outbuildings, totaling approx. 768 m², including former stables of some 208 m² on the ground with gallery above, workshop of 24 m² and barn of 180 m². Under 5 minutes to a village with good amenities.   
Ref: 2051-XML
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