Generally, a French tax agent’s fees are calculated by a percentage of the sale price for a property, rather than the gain. Fees start at 0.5% of the sales price and oftentimes increase another 0.4%, so typically fees are 0.9% plus VAT.
When a property is sold, capital gains tax applies at a fixed rate of 16% for those who are residents of another EU member state, 27% for those who reside in France, and 33.33% for those residing outside of the EU, unless a tax treaty stipulates otherwise.
After the fifth year a reduction of 10% per annum is applied, which means that once the property has been owned for 15 years, no CGT is payable. (See Rules and Regulations for Property Ownership in France as regards the first five years.)
Non residents are required to appoint a tax representative if their property is subject to CGT. Tax representative fees are approximately 1% of the property sale price; however, the fees are deducted from capital gains.
For non-French residents a French fiscal agent must be appointed and is appointed routinely by the notaire. Fiscal agents are tax accountants working as private companies for the French Inland Revenue and their fees are paid by non-French property owners selling their property. Their job is to calculate the amount of French capital gains tax payable on the sale of any property exceeding 150,000 pounds. They ensure that invoices are made out to the seller and that the invoices relate to work that is deductible. Usually deductible work is of a capital nature. Repairs are not deductible.
Notaires use fiscal agents to protect themselves in case there is a tax shortfall. Therefore, a notaire will not complete a property sales transaction involving a non French resident owner without the proper clearance from a fiscal agent. Few fiscal agents both calculate the amount of capital gains tax due and guarantee the French government that the correct amount of tax has been deducted. Consequently, fiscal agents are cautious and err in favor of the French taxman.
The UK-France double tax treaty prohibits any form of tax discrimination against nationals of the other country. However, a UK national has to pay 3% more capital gains tax than a French national. And property of higher value sold with a lower gain will cost a UK national more than a Frenchman because the French agent’s fee will always be worked out according to the sales price rather than the gain.
by V Bright Saigal, AboutFrenchProperty.com - Copyright © About French Property
please could you tell the the correct information. i live in the uk and bought two homes as one lot in 2003. i now wish to see one of these properties. how can i work out how much cgt to pay if im keeping the other property. am i correct that as i live in the uk i only pay 16%cgt and not 27% which a french resident pays?? also as the lot is over 5years old i get an extra 10% of the gains deducted plus all renovation costs that were done by a professional.
please could you advise.
thankyou
Comment by donna carter
I am an American selling a house in the South of France that I inherited 5 years ago. Since I have owned the house for 5 years, do I still need to pay CGT and hire a tax representative?
Comment by Marlene
To clarify my above question, I realize that I will need to pay the CGT, but since I have owned the house for over 5 years my CGT should be 23% instead of 33%, correct? Or, even lower since my mother owned the house for more than 20 years?
Comment by Marlene
in your article you say UK residents pay 3% more CGT than French residents
if the French rate is 16% that would make UK rate 19% but i thought it was 18%? i appreciate that Budget recently changed this to be 18% or 28% depending on your income for the year of sale
m
Comment by Miguel
We are looking to downsize. We live in a small village at the base of the Alberes near Perpignan. We have had our detached house for 8 and a half years.
Could you please advise as to what costs we will incur as the seller. We are aware that the immobliers will take thier cut but the ones we have had to visit say anything from 4-8% is this correct. Any advice would be appreciated thanks
Comment by Sue Holmes
I inherited a house from my parents, which was gifted to me before either of them died (1996). My mother passed away 6 months later and my father died in 2001. Due to the recession, the house has not dramatically increased in value since then and is now being sold for 50,000 Euros. To complicate things further, I am ‘between countries’. I am a UK resident with EU passport, but have been living in South Africa on a temporary visa for the last 3 years. I am being asked to sign a power of attorney which effectively agrees that I will pay Capital Gains Tax - but I have no idea as to how much this would be. Does the 15 year rule apply? On what basis will they calculate the ‘gain’ and should I state a UK address as my residence to reduce tax liability(at the moment I am using the SA address, but purely for postal reasons). Your help would be much appreciated. Thank you.
Comment by Kate Nelson
My partner and I are thinking of retiring to France within the next 12 months. We would retain a small property in the UK, but it would not be rented out. Our sole income would be UK State Pension and our Private Company Pensions. My late was French and my in-laws all reside in Provence, hence the reason for the move. What level of Tax could we expect to pay. Any help would be appreciated.
Ron Hambleton - Sunday 12th September 2010
Comment by Ron Hambleton
I selling a property in Provence. I am not resident in France. I have been asked to obtain a letter from the UK Inland Revenue to say that I am resident the UK, pay my taxes there and I owe no tax for the last Financial Year. Grateful for your comments and advice.
Comment by stoneham
We have owned our French property since 2004. We became French residents and French tax payers in 2007 and our French property then became our only property. This year (2011) we registered as a chambre d’hote (auto entrepreneur) and were told that, we should not consider selling our property for another 5 years at least because we will be hit with huges tax bills. The chambre d’hote is still our main home, we use one bedroom and simply let out the other 3. I am very concerned that we’ve now created a trap for ourselves. Should we discover that we have to give up the business due to ill health or whatever (before the next 5 years are up)what kind of taxes will we now be facing? We would not necessarily sell the property as a business as it could be sold simply as a family home. Any advice on this matter would be greatly appreciated. Many thanks.
Comment by Fred Hayden
Hi
We want to sell our house in Provence as i cannot find a full time job.The estate agent says that as we have lived here less than 5 years,we will have to pay TVA on total price of the house!
This cant be right can it? I know we will have to pay CGT on the profit and we are residents here.I cant find any website saying we have to pay TVA on total amount but if you could confirm
that i would be grateful.We paid all the TVA ect when building the house also.
all the best Chris
Comment by Chris Young