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This page is intended to keep our nonresident contacts informed of pertinent legislative developments or new legal precedents concerning international affairs which may impact their operations and require preemptive action.

Published on Thursday 20/11/2014

French and Luxemburgish authorities signed on 5th September of this year a fourth addendum to their common tax treaty of 1st April 1958, in order to avoid double non taxation in case of transfer of shares in companies which assets are mainly composed of real estate.

 

Another codicil signed on 24th November 2006 and entered into force on 1st January 2008 allowed France to tax income and capital gains resulting from the transfer by a Luxemburgish tax resident of real estate property located in France, on the condition for the real estate to be held directly by the Luxemburgish tax resident or through a tax transparent company.

 

On the contrary, capital gains resulting from transfer by a Luxemburgish resident of shares in companies – the assets of which are composed of a majority of real property or rights/interests attached to real property – were not taxed by France, except if those shares could be linked to a permanent establishment in France. In application of the provisions of the tax treaty, those capital gains were supposed to be taxed by Luxembourg, but in pratice, capital gains were not taxed at all.

 

5th September codicil puts an end to this situation allowing France to tax capital gains resulting from the transfer by a Luxemburgish tax resident or company of shares in companies the assets of which are composed of a majority of real property or rights/interests attached to real property located in France and not used for the company’s activities.

 

The addendum should enter in force on the 1st January following the both states ratification process, so the 1st January 2015 or 2016.

 

However, transfers realized before the entering in force of the addendum might attract the attention of the French tax authorities, if operations exclusively aim at obtaining a tax advantage.

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Tags : International tax law Taxation Real estate investment


Published on Thursday 20/11/2014

French tax system, as most tax systems, currently ignores citizenship as a criterion to determine the tax jurisdiction of a State. Indeed, the most common criterion is tax residence, which definition varies from one country or tax convention to another.

 

As we announced earlier in an article dealing with the transfer of residence outside of France without risks, the importance of nationality in the determination of the tax jurisdiction of a State is going to increase, up to replace the tax residence concept, as in United States of American tax system.

 

In order to illustrate this, we recall that France is about to ratify a tax treaty with the Principality of Andorra, which contains a clause allowing France to tax its citizens living in Andorra, in order to permit tax evaders taxation.

 

In other words, as we explained it, an expatriation project requires to study beforehand the conditions of acquisition of the hosting country citizenship, and the consequences of giving up his birth nationality in order to avoid some taxes. This is why I warned candidates to departure and advised them to take the measure of their project, his consequences, by means of realisation of a multidisciplinary written study regarding the pros and cons of an expatriation before rushing into a premature decision.

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Tags : International tax law Taxation Expatriation


Published on Thursday 20/11/2014

Although French lax and tax law do not fully recognize the effects of trusts, trusts are liable to a specific tax or declarations since 2012.

 

The decree n° 2014-1372 of November 17th, 2014, modifies the declaration in order to comply with the law of December 6th, 2013 (read our previous article on the subject).

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Tags : Real estate investment Trust


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The interdisciplinary expertise of the Selarl Bruno Bedaride, notaire in Paris covers the following areas: corporate law, international contracts law, legal and tax advice, advice for international transmission, real estate law, family office, real estate and company finance law. We offer more particularly our services to non residents or foreign company who wish to invest, move or create a business in France.