Determining tax residence in France (art.23)
The French Supreme Court (“Conseil d’Etat”) had ruled that the notion of tax domicile outside France triggering the withholding tax on wages paid by French employers must be assessed in the light of the legal provisions set out in domestic legislation, independently of “tax residence” within the meaning of international tax treaties (CE, February 5, 2024, n° 469771, Sté Axa Group Opérations).
In a press release dated April 29, 2024, the tax authorities had stated that the principle of primacy of treaty law over domestic law should remain in force and that they were not ready to implement the Supreme Court’s ruling.
Article 23 of the Finance Bill therefore amends Article 4 B of the French tax code to state that persons who meet at least one of the domicile criteria set out in domestic legislation cannot be considered as having their tax domicile in France if they are not considered to be resident in France under a double taxation treaty.
Disposal of housing units rented on a furnished, non-professional basis (art. 24)
For the purposes of determining the capital gain or loss on the sale of a property that has been let on a non-professional furnished rental basis, any depreciation deducted during the rental period would be deducted from the purchase price. According to the bill's explanatory memorandum, this measure would apply to capital gains arising from sales taking place on or after January 1, 2025.
