Real estate transaction costs and taxes in France

Cost

Free “or” EUR 300– EUR 800

VAT

20%

Cost

N/A

VAT

N/A

Cost

EUR 20-EUR 30

VAT

Nil

Cost

EUR 70

VAT

20%

Cost

EUR 3,800– EUR 14,000

VAT

20%

Cost

Negotiable

VAT

20%

Cost

(i) On sales within five years of building completion: VAT on whole purchase price or
(ii) upon election of the seller VAT on the whole purchase price or on the margin.

VAT

20%

Cost

In principle 5.09006%, with a maximum rate of 5.80665% upon election by Department. Reduced rate (0.71498%) or fixed duty (EUR 125) may apply (new building or seller commitment to resell or to build or to significantly renew the building).

Upon the sale of shares (“actions”) or interests (“parts sociales”) of a non-listed (French or foreign) company, the assets of which are directly or indirectly composed for at least 50% of French real estate the purchaser of shares or interest is subject to transfer taxes of 5% which will apply to the sale price or the fair market value is higher. Regarding company’s which does not predominantly own real estate, the transfer of shares (actions) would be subject to a 0.1% transfer tax (of the sale price, or its fair market value if it is superior) and the transfer of interests (parts sociales) would be subject to a 3% transfer tax applying to its sale price with an abatement calculated as follows: € 23,000 x number of interests sold / total number of interests. Exemptions may apply to the transfer of shares of companies that do not predominantly own real estate: for instance, transfer of shares between companies that belong to the same group are exempt.

Sale by a French resident company (or by the French PE of a foreign company): capital gains are taxed at standard Corporate Income Tax (CIT) rate of up to 34.43% until 31st December 2019, up to 28,92% as from 1st January 2020, up to 27.37% as from 1st January 2021, and up to 25.82% as from 1st January 2022. (NB: special rules apply to SIIC, SPPICAV or real estate investment companies opting for the “SIIC” regime and fulfilling all requirements).
Sale by a foreign company: subject to relevant tax treaty, whether or not the company is subject to CIT in France (on this gain), a withholding tax is levied at a rate of 33.1/3% until 31st December 2019, 28% as from 1st January 2020, 26.5% as from 1st January 2021, 25% as from 1st January 2022, (but this withholding tax should be credited against CIT if due, and excess compared to CIT due or, otherwise, to CIT that would be due by a French resident, can be refunded). This rate would also apply to disposal by real estate dealer or developer with no PE in France.

Sale by a French resident company: CIT rate is up to 34.43% until 31st December 2019, up to 28,92% as from 1st January 2020, up to 27.37% as from 1st January 2021, and up to 25.82% as from 1st January 2022, if the company is a non-listed predominant real estate company (as regards this tax, a predominant real estate company has, on the day the shares are disposed of or at the end of the previous fiscal period, 50% of its assets composed of real estate that the company does not use to carry out a business activity). Sale by a foreign company: subject to relevant tax treaty, whether or not the company is subject to CIT in France (on this gain), a withholding tax at a rate of 33.1/3% until 31st December 2019, 28% as from 1st January 2020, 26.5% as from 1st January 2021, 25% as from 1st January 2022, applies to the gain from a disposal of shares in a non-listed predominant real estate company (but this tax should be credited against CIT if due, and excess compared to CIT due or, otherwise, to CIT that would be due by a French resident, can be refunded). As regards this tax, a predominant real estate company has, at the end of the three tax periods preceding the sale, 50% of its assets composed of French real estate that the company does not use to carry out a business activity. If the seller is located in a non-cooperative jurisdiction, the withholding tax is increased to 75%.