In May, the French Parliament amended the 3% annual tax régime on foreign entities owning directly or indirectly French immovable property.
The undertaking exemption route is abolished as from next year.
Any company, or significantly a trust owning a direct or indirect interest in a French immovable will now have to file an annual declaration by 15 May. The entire ownership structure will need to be disclosed.
A fiscal representative will need to be appointed for the entity in France.
The annual declaration route pardons no errors defaults or omissions - the French courts have been very clear on that. Any such omission error or default renders the 3% tax due.
It will also render the structure open to review for the prior six years.
The idea is to render holding French property entirely transparent for gift and succession duty purposes. In effect the changes will render any indirect transfers through he overlying structures visible and chargeable. They will also enable the French administration to instigate procedures for disguised distribution of benefits to those using the properties concerned.
Having advised clients to prefer and use the undertaking route in the past, I am aware of the risks of non-compliance in this area and can assist in any restructuring whether it be legal, fiscal or administrative.
Peter Harris
#overseaschambers.com