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Wealth tax in France

News & Guides / Wealth tax in France

In 2018 France replaced its more generic wealth tax “ISF” (Impot sur la fortune) with a specific wealth tax due only on property called “IFI” (Impot sur la fortune immobilière) both for residents and non-residents. Wealth tax is due if your NET assets in France exceed 1.3m Euros on the 1st January each year and the calculation of your NET wealth is your own responsibility where checks can be made at any time by the French authorities. If your wealth in France is above 1.3m Euros then you will be liable to wealth tax on any amount above 800,000 Euros according to the tax bands indicated below:

Band of valueTax rate
Up to 800,000 Euros0%
800,001 Euros to 1.3m Euros0.5%
1,300,001 Euros to 2,570,000 Euros0.7%
2,570,001 Euros to 5m Euros1%
5,000,001 Euros to 10m Euros1.25%
Above 10m Euros1.5%

Taxes, bank loans and other debts are deductible before any tax is due and if you live in France then you are entitled to a 30% allowance on your main home. If your assets are held within a company structure like an SCI or SARL de Famille then this is still liable to wealth tax. To reduce or eliminate the wealth tax due for those looking to buy property in France valued at over 1.3m Euros, they are often encouraged to take a significant mortgage to bring them below this threshold even if they don’t need it. The cash they would otherwise have been used to pay for the property can then be put in an income generating investment. This will cancel out the mortgage interest due so that the NET result is zero or even positive if interest rates are particularly low. Another common way of reducing wealth tax is to transfer shares in a company owning the property to family members.

If considering any of these options it is important to speak to a tax planner who is aware of the intricacies of the tax system both in France but also in the country you live in. This way you can be sure you are arranging your finances in the most tax efficient way.

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