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The 2017 French Budget Draft

Article by Loic Raboteau, International Legal Advisor and French Property Law Expert, Francophile Law

IT IS IMPORTANT TO GET GOOD LEGAL ADVICE WHEN BUYING A SKI PROPERTY IN FRANCE.

In September 2016, the French government submitted its draft budget for 2017. While it must be discussed and has scope to be amended, the main points are summarised below.

Corporation Tax

Currently set at 33.33%, the rate is set to be decreased to 28% progressively over the coming 4 years as follows:

1 Jan 2017: The 28% rate will be applied to profits between €38,120 and €75,000 made by small and medium enterprises. The reduced rate of 15% still applies to the first €38,200 of profits.

1 Jan 2018: The 28% rate will apply to profits up to €500k for all companies.

1 Jan 2019: The 28% rate will apply to total profits with turnover less than €1 billion.

1 Jan 2020: The 28% rate will apply to total profits for all companies.

Income Tax

Individual tax income bands will be increased by .1% to account for inflation. The new rates for income received in 2016 are as follows:

Net Income

Tax rate

Up to €9,710

0%

€9,710 to €26,818

14%

€26,818 to €71,898

30%

€71,898 to €152,260

41%

Over €152,260

45%

From 1 Jan 2018, income tax will be collected under the Pay As You Earn (PAYE) system where income tax is deducted from salaries by employers before employees receive it.

Income tax reduction for property letting investments

Existing tax reductions for buy-to-let investments of furnished and unfurnished properties are extended to purchases made by French Tax residents until December 31 2017.  

Energy Tax Credits

The tax credit applicable to costs associated with improving the energy performance of housing is extended until 31 December 2017.

Inpatriate Regime

Inpatriates are currently allowed to spend 5 years working in France. For those who commenced employment on or after 6 July 2016, this working period will be extended to 8 years.

Wealth tax

Further measures will be introduced to make it harder for individuals to artificially modify their income on paper. The tax administration observed that some taxpayers reduce their investment income via the use of holding companies (e.g. the use of SCI’s to own real estate). Where it is discovered that the main purpose of the holding company to avoid wealth tax, administrators will be able to take this income into account when calculating the wealth tax limit.  

Gift/inheritance tax

Currently, beneficiaries who have three or more children benefit from a gift/inheritance tax reduction amounting to €305 (or €610 for gifts in the direct line or between spouses). This reduction will be repealed from 1 January 2017. 

For Further Information on Buying Ski Property in France:
Guide to Buying Ski Property in France
Mortgages for Property Purchase in France