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Published on Thursday 19/03/2015

In response to a condemnation of the (French Administrative Supreme Court) of 20 october 2014, article 244 bis of The French General Tax Code (CGI) has been modified concerning the taxation of real estate capital gains.


It now follow that a SCI (civil law real estate company) is subject to a withholding tax on the capital gains resulting from the sales of real estate regardless of the place of residence of its partners.


This legislative change is made in order to comply with the law of the European Union. Thus, the tax rate on real estate capital gains realized by individuals directly or through a real estate investment fund is set at 19% irrespective of their place of residence (France, European Union, Norway, Iceland, Liechtenstein or third State).


Two points should be raised


Regarding the rate of 75% for residents people in a Non-cooperative State Territory (NCST), the French Constitutionnal Council overruled, in its decision of 29 December 2014, the provision for these exceptional rates on the basis of non-compliance with equality before public burdens, as it posed to the taxpayer an excessive burden in terms of its ability to contribute.


Finally, this legislative amendment applies to capital gains realized on sale made on or after January 1st, 2015. However resident taxpayers in a third State may request partial reimbursement of the withholding tax for the different rates in based on the French Administrative Supreme Court jurisprudence aforementioned.


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Tags : International tax law

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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.