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France’s new real estate wealth tax

From 1 January 2018, the French general wealth tax has been replaced by a new real estate wealth tax (impôt sur la fortune immobilière). The new tax is restricted to real estate assets held directly by an individual or indirectly through a company.

This is unlikely to bring significant changes for individuals not resident in France. However, the new rules extend the scope of the real estate wealth tax to shares of companies previously wealth tax exempt and limit the deduction of liabilities directly owed by taxpayers.

The new regime can be considered similar to the old regime regarding non-residents. However, caution must be exercised as non-French shareholders could be found liable to pay tax in respect of their French real estate assets held indirectly through layered entities.