Non French resident specifications on French Capital Gains Tax

French Capital Gains Tax, French tax representative

Non French resident specifications

A - INTRODUCTION

Capital gains made by non French residents on the transfer of real estate located in France or of a company with real estate ascendancy are taxable in France unless otherwise stipulated in a tax agreement with the country of residence of the vendor. The current rate is 33.3%.
Social charges do not apply to non residents.

B - APPLICATION

The following persons are taxable to capital gains in France :
- natural persons who are not domiciled in France
- companies whose head office is located outside the French territory
- French partnership companies hold totally or partially by natural persons who are not domiciled in France.

The following assets are taxable to capital gains in France :
- the transfer of built estates or land
- shares hold in a company with real estate ascendancy
- shares of investment trusts in real estate (FPI) or of any quoted companies.

C - EXEMPTIONS

Non residents benefit from the same exemptions as French tax residents.

For the companies with real estate ascendancy, the only exemption granted is the one related to the duration of owning the asset.

A resident of a member state of the European Economic Area can be exempted from capital gain under the double condition of :
- being a French tax resident in a continuous way during at least 2 years at any time before the transfer
- and having the free disposal of the asset at least since January 1st of the year preceeding the year of the transfer.

D - ASSESSMENT OF THE CAPITAL GAINS

For the natural persons and the partnership companies, the assessment is identical to the one for the residents. The fees for the compulsory tax representative decrease the sale price of the building.

For companies liable to corporate tax (IS) whose head office is located in a member state of the European Economic Area, the calculation is the same as for a company liable to corporate tax whose head office is located in France.

For companies based in another country, the capital gain is calculated by the difference between the sale price and the purchase price, decreased by 2 % for each full year owned. It is also possible to deduct costs associated with the construction, enlargement or improvement of the property under the double condition that:
- these works are billed and paid by the company (evidences to provide)
- and not already deducted for the calculation of a previous tax.

E - TAX RATE OF CAPITAL GAINS

The current rate is 33.3% except for the residents :
- of a member state of the European Economic Area : 19%
- of a non cooperative state or territory : 50%.

F - DECLARATION & PAYMENT OF THE CAPITAL GAINS

It is settled when signing the deed of sale with the notary.

Natural persons do not have to submit a tax declaration when they are exempted of capital gains because they have owned the real estate for more than 30 years or because they have sold the real estate less then €15,000.

All non residents have the obligation to appoint a tax representative in France, like French-Capital-Gains-Tax.fr, who commits to comply with all the formalities and to pay the capital gains tax on behalf of the non resident.

When the sale price is lower or equal to 150.000 €, natural persons are automatically exempted of appointing a tax representative.

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