We advise the user of our website that they should never answer any request made with the office's seal, especially involving loans which are scams.



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 13/06/2013

This study is aimed at providing an outline of all the consequences resulting from the ownership of a leisure property located in France (whether a listed building or a high standing leisure property in the mountains or by the seaside) from a legal, tax and economic viewpoint. The leisure property can either be held by the purchaser directly or indirectly by means of a body corporate (whether a French or overseas company, a French fiducie or a British trust). Each of these solutions triggers peculiar consequences.

One shall distinguish between cases where the real property is allocated to a business activity and cases where it is not. Every project shall be examined on a case-by-case basis in collaboration with legal and tax advisers from the client's country of residence. This analysis shall be done taking into account the purpose of the client's prospective purchase.


Part I – The Different Steps of Buying Real Estate in France...3
I.1) Introduction of the French Notaire...3
I.2) The Offer to Purchase (offre d’acquisition)...4
I.3) Signature of a Preliminary Agreement (avant-contrat)...6
I.3.1) Nature of the Different Preliminary Agreements...6
I.3.2) Object of the Purchase : Real Estate or Shares of a Company ?...6
I.3.3) Escrow or Bank Guaranty?...7
I.3.4) Seven Day Cooling-Off Period...7
I.3.5) Condition precedents...8
I.3.6) Pre-emption Rights...9
I.3.7) Costs...11
I.4) Specific Rules Regarding the Acquisition of a Building to be Erected...11
I.5) Setting Up a Structure in order to Hold the Real Property...12
I.6) Setting Up the Bank Loan...14
1.7) Signing of the Final Deed of Purchase...15
I.8) Follow-Through After the Purchase...15
Part II - Tax-Related Consequences under French Law...18
II.1) The Residence for Tax Purposes...18
II.2) Taxes Related to the Property of the Real Estate...19
II.2.1) Wealth Tax (impôt sur la fortune or ISF)...19
II.2.2) Special Tax and mandatory declarations when the Real Estate Property is held by means of a Trust...21
II.2.2) Land Tax (taxe foncière)...22
II.2.3) 3 % Tax (taxe de 3 %)...23
II.2.4) Economic Contribution for Local Territories (Contribution économique territoriale)...24
II.3) Taxes Related to the Use of the Real Estate...25
II.3.1) Notional Income Tax (impôt sur le revenu forfaitaire)...25
II.3.2) Residence tax (taxe d’habitation)...27
II.4) Taxes Related to the Transfers of the Real Estate...27
II.4.1) Taxes Related to Transfers of the Real Estate With Consideration...27
II.4.2) Taxes Related to Transfers of Real Estate Without Consideration: Gift and Inheritance Tax (droits de donation et de succession)...33
II.5) Rules Concerning Taxation of Real Income in France...35
II.5.1) The Real Property is Held by an Individual...35
II.5.2) The Real Property is Held by Means of a Corporate Body...37
II.6) Special Treatment Concerning Listed Properties...38
II.6.1) Income Tax Deductions...39
II.6.2) Exemptions from Gift and Inheritance Tax...41
II.6.3) Wealth Tax Relief...41
Part III - Authorizations concerning town-planning...41
III.1) Demolition License (permis de démolir)...42
III.2) Building License (permis de construire)...42
III.3) Preliminary Declaration (déclaration préalable)...42
III.4) Sanctions for Building Work Performed Without Authorization or Authorization Infringement...43
III.5) Specific Rules...43
III.6) Authorizations on Listed Properties...43
III.6.1) Real Property Listed MH (immeuble classé au titre des monuments historiques)...44
III.6.2) Real Property Listed ISMH (immeuble inscrit au titre des monuments historiques)...45
III.6.3) Building Leaning Against Building Listed MH and Real Property Located within a Property Listed MH or ISMH's Field of Visibility...45
III.7) Specific Constraints Insofar As Properties Located by the Seaside are Concerned...46
Part IV - Investment Optimisation...47
I.V.1) The Real Property is not Meant to be Used for Business Purposes...47
IV.2) The Real Property is Meant to be Used for Business Purposes...52
Appendix: Summary...55


To conclude, the choice of a non resident upon the way how to acquire a leisure property in France, depends on economic goals (whether strictly non-professional ownership for housing purposes or professional ownership for business purposes). The client needs to be as specific as possible about these goals in order for his advisors to be able to draft a preliminary report in writing, which would contemplate the different possibilities. Once the mechanism has been put in place, statute and tax and legal documentation (company's clerk work, tax returns) needs to be followed up by the client's advisors. This can all be done at our office.
Holding the land by means of a company, should rather be considered if the prospective buyer plans to keep it on a long-term basis (more than 30 years) or if one plans to transfer it to a family member in the future. If the prospective buyer means the real property to be sold within a short time, one shall advise the individual to acquire the land directly.
The form of the company, which shall purchase and hold the real property will depend upon the purpose of detention of the property: estate keeping not trading company not subject to corporate tax or trading company, i.e. subject to corporate tax).

As a general rule, a company set up for the specific purpose of holding land usually needs to have its registered office in the same country as the real property in order to avoid legal and tax-related difficulties.

Complex tax planning performed only for tax avoidance purposes does indeed often bring about some difficulties and needs an active following through, which is not always done properly. Furthermore, getting out of the tax planning structures is even more difficult and it brings about uncertainties. Sometimes it may also bring about capital losses at the moment of the sale of the acquired property since the vendor may remain "trapped" in the initial tax plan.

Besides, the rules enabling French tax avoidance, have recently been more and more challenged (Article 164 B of the French Tax Code regarding the definition of income from French sources, and the tax convention between Luxembourg and France and between France and the United Kingdom have already been modified).


>>  Read more

Comment (0)
Tags : Trust Taxation Real estate investment Family office Personal wealth Sale Gift/Transfer International law International tax law Société civile immobilière/SCI

Accueil - Home      Legal notice     Site map     Contact     
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.