French anti-fraud law
Key tax implications for Monaco residents holding real estate in France
The 3% tax on the market value of real estate held in France: increased reporting obligations
The possibility of benefiting from the exemption from this tax by undertaking, at the time of acquisition, to provide the tax authorities with certain information concerning the property and the shareholders upon request has been abolished.
The full tax exemption is now reserved for entities that file annually, by 15 May at the latest, information relating to properties held as at 1 January and to shareholders, stockholders or members holding more than 1% of the rights. This information corresponds to that previously covered by the communication undertaking.
The abolition of the undertaking also entails the removal of the regularisation mechanism applicable in the event of non-compliance with that undertaking. The entity will therefore no longer be able to recover the exemption by subsequently providing the required information.
This measure is intended to simplify the administration of the tax, improve knowledge of real estate ownership chains and strengthen the fight against tax fraud, particularly in relation to the 3% tax, the real estate wealth tax (IFI) and gratuitous transfer duties.
This new law requires entities that do not have a permanent establishment in France to appoint a tax representative authorised to receive communications, procedural documents and notifications relating to the administration of the tax.
Unless given a special mandate, this representative may not file the return and is not jointly and severally liable for the payment of the tax.
The appointment is made on the annual return (Form 2746) filed by 15 May at the latest. The representative may be a natural or legal person domiciled or established in France.
These provisions should apply for the first time to the return filed in May 2027.
Transfer of real estate-rich companies: new obligations
This new law requires the involvement of a professional subject to anti-money laundering and counter-terrorism financing obligations (notary, lawyer or authorised accountant) for transfers of shares in real estate-rich companies (“SPI”).
The measure aims to close a gap in the due diligence framework by ensuring the identification of parties and ultimate beneficial owners, the traceability of financial flows and the legal certainty of indirect transfers of real estate.
Until now, transfers of shares in SPIs could be effected by a simple private deed executed between the parties and then submitted for registration.
The newly created Article 1865-1 of the Civil Code now requires such transfers to be recorded by a notarial deed, a deed countersigned by a lawyer or, where the law so permits, a deed drawn up by an accountant.
In the absence of such a deed, registration will be refused and the deed will be absolutely null and void.
As a reminder, any unlisted legal entity whose assets consist, or consisted during the year preceding the transfer, principally of real estate or real estate rights located in France, or of interests in entities that are themselves real estate-rich, is considered to be a real estate-rich company.
It is recalled that transfers of SPIs carried out abroad must be recorded within one month by a deed executed in notarial form by a notary practising in France.
These new rules will apply to transfers taking place from the day following the publication of the law in the Official Journal.
