Holding property abroad, or in France from abroad
Property held by a non-resident or located abroad: rental income, capital gains, wealth tax, the 3 % tax and reporting duties.
Contents
The situation
Two mirror-image positions, and two sets of obligations usually discovered at the point of sale.
The non-resident letting a flat in France, who learns on sale that a tax representative may be required, that the gain bears income tax and social levies, and that the years of letting were not declared where they should have been.
The French resident owning property abroad, unaware that foreign rent must appear in the French return even when taxed abroad, and that the property falls within the wealth tax base.
What the rules say
| Position | Treatment |
|---|---|
| Rent from French property received by a non-resident | taxable in France, with a minimum rate unless a lower one is evidenced |
| Capital gain on sale by a non-resident | taxable in France, social levies included, with tax representation in the cases provided for |
| Rent from foreign property received by a French resident | to be declared in France, the treaty dealing with double taxation |
| Wealth tax on property | foreign property of a resident is within the base; a non-resident is taxed on French property |
| Foreign company holding French real estate | annual 3 per cent tax on market value, unless the annual return identifying the shareholders is filed (articles 990 D and following) |
What the firm does with those rules
Before acquisition, the work is to choose the holding structure for what it will cost on exit and not only on entry: direct ownership, a civil company, a foreign company, each has its own regime for income, gains, transfer and wealth tax.
During ownership, it is to meet the reporting duties, the most frequently forgotten being the annual return that removes the 3 per cent tax.
On sale, it is to prepare the computation of the gain, to check any available exemption and to deal with tax representation.
Frequently asked questions
Does a non-resident pay social levies on French rent?
French-source property income bears social levies, at a reduced rate for persons covered by the social security scheme of another Member State.
Is a tax representative required to sell?
In the cases provided by law, depending on the seller’s country of residence and on the price. Exemptions exist.
What is the 3 per cent tax?
An annual tax on the market value of French real estate held by foreign entities, avoided by declaring the shareholders and the property each year.
Is my property abroad within the French wealth tax base?
Yes, if you are resident in France. A treaty may limit the effect.
This article sets out a general framework and is no substitute for a review of your file: every situation has its own dates, figures and documents.