If you are selling, or are thinking of selling your French property, you need to consider whether French capital gains tax (CGT) will be due.
When is French property CGT due?
The most familiar transaction that is subject to French property CGT is a straightforward sale between individuals, in exchange for money. Other less common types of transfers may also be subject to French property CGT, for example an exchange of properties, expropriation (enforced sale) or an auction, to name but a few. Whenever property changes hands you need to consider whether French property CGT will be due.
The rules described here apply only to the sale of real estate property. There are separate CGT rules for selling other types of assets such as financial investments.
Real estate property means a physical land or building. It can also include a real estate property fund or shares in a company that owns real estate property. We normally refer to real estate property simply as property.
Companies that sell property are normally subject to special CGT rules for companies. However certain companies can be subject to French property CGT, for example a non-trading SCI. In this case the capital gain is attributed to the individual shareholders.
How does residence affect French property CGT?
An individual’s tax residence can affect whether they pay French CGT. Normally we need to look at three things:
- the tax rules in the individual’s country of residence;
- the country in which the property is located;
- what the double tax treaty (if one exists) between the two countries says.
The table below summarises the situation between France and the UK.
| Residence of individual | Location of property | Subject to French CGT? |
|---|---|---|
| UK | UK | NO |
| UK | France | YES (double tax relief in UK) |
| France | France | YES |
| France | UK | YES (double tax relief in France) |
What are the exemptions from French property CGT?
There are several exemptions from French property CGT. The most common exemption is for the disposal of the main residence. This is not normally available to non-French residents, as their main residence is usually elsewhere. Read more.
French property CGT – How to calculate the gain
In simple terms, the capital gain is the sale price less the purchase price. We adjust for additional costs incurred when buying or selling the property. Examples of additional costs are French stamp duty and agency commission. We also add the costs of improving the property. Finally, there is a French CGT taper relief for period of ownership. After holding the property for 30 years, the capital gain is reduced to zero and there is no French CGT to pay. Read more.
French property CGT – How to calculate the tax
The ‘tax gain’ is subject to a standard 19% rate. The ‘social charges gain’ is subject to a 17.2% rate. The social charges rate is reduced to 7.5% if you pay national insurance contributions in another EEA country or Switzerland. Tax gains over €50,000 are subject to an additional tax charge which ranges from 2% to 6%. Read more.
How to declare and pay French property CGT
In most cases French property transactions are overseen by notaries. They are also responsible for declaring and paying the tax to the French tax authorities. In some cases, however, the sellers will need to declare and pay the CGT themselves. Read more.