French tax changes 2009

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Roger O
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French tax changes 2009

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Source (open):
http://www.rivierareporter.com/content/ ... 51/#pc_537
French Tax Changes for 2009
Written by Peter Johnson
The Sarkozy era has seen a raft of new legislation in 2008 affecting tax in France and the main points that could impact on the life of expatriates are as follows :

The social charges (CSG etc.) applicable to unearned income (dividends, interest, rental income etc) rise from 11% to 12.1%
The standard rate of capital gains tax on real estate transactions for EC members on a secondary residence rises from 16% to 18%
The two measures above effectively mean that the sale of a secondary residence in France for a French tax resident carries capital gains tax at 30.1%

One of the main goals of the 2008 reforms was to tighten up on various tax loopholes, one in particular being that of the professional landlord being able to offset 71% expenses against rental income under the micro BIC regime and benefitting from an exempt amount for capital gains of 250000 Euros.

All change !

From 2009 the criteria for being able to operate as a professional landlord under the micro BIC regime are that both rental income in excess of 23000 Euros per annum and that this rental income represents more than 50% of that person s total income. In the past one only needed to fulfill one of these criteria. The new ceiling for the micro BIC regime is brought down from 76300 Euros rent per annum to only 32000 Euros with the expense allowance being reduced to 50%. For capital gains the exempt amount drops to 90000 Euros.

The new micro BIC ceiling for earnings and expenses also applies to non professional landlords. In future, therefore, more people will have to declare full rental income offset by real expenses, thus closing off the tax loophole and creating extra revenue for the tax office !

....and now the good news !

In August 2008 the government ratified the five year moratorium on wealth tax (Impots sur la Fortune— ISF) on a UK expatriate s assets held outside France. These five years are complete years, so if a UK expatriate moves to France in say July 2009 they won t declare for ISF until 2015. The second piece of good news : from 1st January 2008 any expatriate employed by a UK (or other foreign company) who is newly resident in France (ie. who has not been fiscally resident in France for the previous 5 years) will benefit from a 50% exemption on their UK remuneration (dividends and/or salary) and thus only pay French tax on the other 50%.


Peter Johnson
(Peter Johnson Business & Financial Services SARL)
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