French tax issues

Income Taxes

The structure of the leaseback generally is such that profits are reduced by the depreciation allowances on the property, it is unlikely that income tax would be paid on your leaseback property investment. However, if you own a number of properties in your portfolio, the tax implications may change but in general it is unusual to pay income tax on a leaseback.

Inheritance Tax

As in all countries inheritance Tax is complicated and any investor would be advised to speak to a solicitor to draw up a will based on you specific requirements, as the laws in France are very different. Tax is payable on gifts or inheritance of worldwide assets, however, for inheritance tax only, tax is calculated on the net value of the assets minus deduction of liabilities.

The rate of Tax is calculated based on a number of factors i.e. the recipient’s relationship to the donor needs to be established to acquire the recipients personal allowance.

A spouse's personal allowance is currently 46,000 for parents and children. The balance in excess of the allowance is taxed at progressive rates from 5% up to and not exceeding 40%.

Relations, such as next of Kin and distant family members have smaller allowances and therefore are given an higher rate of tax in these circumstances. 

Capital Gains Tax

Any individual will start out with a standard liability of 16% and after 5 years this commences to reduce at a rate of 10% per annum. This means that 15 years after buying your leaseback you would have no capital gains Tax to pay.

Note: After 15 years of paying a repayment mortgage and incorporating the fact you have no capital gains tax to pay, you would own the property outright and have no financial liabilities against your retirement fund.

UK- France tax treaty

The most important relief from inheritance tax are the international tax treaties that provide relief from double taxation. There are some other limited exemptions from inheritance tax but there exemptions are subject to specific conditions being satisfied.

Tax issues vary from region to region, please select below the area you are insterested in.