Wealth Tax Enquiries
This information has been prepared by Sykes Anderson Perry Limited as a general guide only and does not constitute advice on any specific matter. We strongly recommend that you seek professional advice before taking action. No liability can be accepted by us for any action taken or not taken as a result of any information or advice given or omitted. The information herein does not constitute investment advice. Always consult an IFA if before taking any investment decision.
Individuals with high value properties in France will generally have considered the impact of wealth tax when they acquired their property. It is possible that they structured ownership and lending arrangements in a way to reduce their exposure to wealth tax.
However, over the years, the rules have changed relating to wealth tax and the thresholds have also changed. If structures have not been reviewed and values not re-considered, there are potential issues which might arise.
Previously, our experience was that the French tax authorities did not actively pursue wealth tax claims. Generally their approach was relatively passive and there would only be an enquiry if a property was sold for a price significantly higher than the value attributed to it for wealth tax purposes.
This approach has changed with local tax offices in certain affluent parts of France being more active in these matters. We have started to see a number of cases where the authorities are challenging the values of properties and also challenging debt arrangements which have been in place for a while.
The authorities will generally go back 6 tax years and will claim late payment interest and penalties so the amounts claimed can be significant. Enquiries can last a long time and can be stressful.
We take a pro-active approach to these enquiries on behalf of our clients. Whilst analysing the claim in detail is necessary and responding in a robust manner is advisable, where possible, it is also sensible to take a commercial approach to these enquiries and meet with local tax inspectors at an early opportunity.
If you have received an enquiry from your local tax office please contact Graeme Perry to discuss how we can assist.
Graeme Perry, Solicitor
Sykes Anderson Perry Limited