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JJ Michallon - Tax Attorney - Former Tax Inspector

A) - FRENCH INCOME TAX FOR NON-RESIDENTS

To know how a person will be imposed in France, when, where he is domiciled tax

1 Definition of tax residence

A person is considered, subject to an international convention, as having his fiscal domicile in France while he meets one of the following four criteria:

- The person has his home in France

The home means the place where the person or his family (spouse and children) live normally, that is to say, the place of habitual residence. It does not take account of temporary stays elsewhere for professional reasons or exceptional circumstances.

- The person has his principal place of residence in France

It holds the place of residence of the person itself, without focusing on place of residence of the family. It is sufficient that the person has lived in France more than 183 days during a year.

- The person is economically active in France

- The person in France the center of economic activities

This is where the person has made his principal investments, where it has registered its business or the center of his business, where it manages its assets.

2 Persons not having their fiscal domicile in France

People who do not tax their residence in France are still likely to be subject to French tax.

In view of the French tax law, we must distinguish whether or not taxpayers have a home in France.

taxpayers do not have a home in France

Since their tax domicile overseas, these taxpayers are liable to French tax unless they have income from French sources (of income properties located in France, French income from securities, income from 'agricultural, industrial, commercial or artisanal allowances lying in France ...) and because of these revenues alone.

The income tax payable by non-resident taxpayers is calculated by applying the tax base, consisting of such income, the progressive scale and the system of family income.

taxpayers have a home in France

People who have their tax domicile abroad but who have, in France, one or more dwellings are, in principle, subject to French tax:

either because of their income from French sources,

either on a lump sum equal to three times the rental value of these homes, if their incomes do not exist in France or lower than the flat rate.

But international conventions on double taxation treaties and reciprocity can lead to or create exceptions to France to withdraw the right to tax the income from French sources

B) - FRENCH WEALTH TAX

Individuals domiciled outside France shall be taxable only because of their property in France (TPP with a base material in France, real estate properties or rights owned directly or indirectly in France, claims against a debtor is established in France ...).

However, international conventions on the elimination of the double taxation that may provide a share of taxation rights between states.

Moreover, the financial investment of non-residents are specifically exempt. These are all investments made in France and incomes that fall under the category of income from movable capital: bonds, or social rights - with the exception of equity securities and shares in companies predominantly real estate - deposits at call or term deposit accounts of members, life insurance and capitalization companies underwritten by French insurance ...

C) - FRENCH CAPITAL GAINS

Subject to international agreements, individuals who are not tax resident in France and corporations with headquarters outside France are subject to a levy on capital gains as a result of the occasional sale of real estate France.

The methods of determining the gain, where the transferor is subject to income tax (natural persons or partnerships) are aligned on the provisions applicable to Taxpayers domiciled in France.

Taxpayers individuals not residing in France enjoy most of the exemptions for residents and an additional exemption subject to conditions in the first two sales of properties within their home in France.

A statement of appreciation is required whenever the transferor is a person resident in France, there are taxable capital gains or not. Individuals are not required to file a declaration if they are exempt period of ownership or transfer price less than € 15,000.

The levy rate is normally fixed at one third (33 1 / 3%). Notwithstanding, it is 16% for capital gains realized by resident individuals including a member state of the European Union.

This levy is paid under the responsibility of an accredited representative, to represent taxpayers domiciled outside France.

The designation of the accredited representative is mandatory regardless of the nature, the price rise to the assignment or the quality of the transferor.

D) - TAXATION ON FOREIGN COMPANIES OWNING PROPERTIES IN FRANCE

The French or foreign legal persons, organizations, trusts that own, directly or indirectly, one or several buildings in France are liable to pay an annual tax of 3% sitting on the market value of these buildings.

This fee is applicable regardless of the form of legal entity (company or corporation, associations ...).

The tax is levied on property or rights of property owned on January 1 of the tax year.

> However, the following, subject to this tax:

- foreign states and international organizations,

- companies whose shares are regularly negotiated and significant on a regulated market,

- under certain conditions, certain corporations which have their seat of management in France, in a Member State of the Union or in a State which has concluded with France a convention on administrative assistance in the fight against fraud and evasion of taxes or in a State which has entered into an agreement with a clause of equal treatment (also referred to as non-discrimination clause or as nationals): pension funds, corporations who sign an annual declaration 2746. ..

- Corporations whose buildings located in France are less than 50% of French assets. To calculate the limit of 50%, buildings affected by the corporation to its own business other than real estate are not taken into account

The representative may be the purchaser including tax resident in France, a bank carrying on business in France or any person approved by the Director of Tax Services. Some agencies receive a permanent license tax representation.

Notwithstanding the common law system, individuals are automatically exempted from appointing a representative accredited when the sale price is less than or equal to 150,000 € or if the gain is exempt under the holding period of property.

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