UK residents owning property in France are likely to see an increase in the French taxes they pay from 1 January 2012, according to KPMG in the UK as a result of two key changes.
The first of these changes is the introduction of a new annual tax levied on non-French residents owning property in France that is not rented out.
The second change to potentially affect French property owning residents comes as a result of a number of amendments to the French wealth tax rules. Within these changes are proposals that would bring properties worth more than €1.3 million owned via a company into the scope of the French wealth tax regime.
A KPMG spokesperson, said: “These are significant changes and Britons with property in France need to look at them carefully to see how they are affected. Although the new rules are set to come in from January 1st next year, we do not yet have full details of how they will work. It does seem though that some people will see their annual tax bills double and they could also face paying wealth tax as well.
“The changes to the wealth tax regime are a double edged sword in the extent to which they affect Britons with properties in France. Those who own valuable (€1.3m+) properties via a company are likely to find themselves drawn into the wealth tax net and thus paying an extra tax. But those who are already subject to French wealth tax rules because they don’t own their properties in this way may see their tax bills fall as the actual rates of wealth tax are reducing.”
The changes are set to be adopted by the French parliament by mid-July this year and are still subject to change. But in KPMG’s view most UK residents with property in France are set to pay increased French taxes from next year.