Law & Numbers - News Tax

Private assets tax reform in France

22.04.2011 (France)

What would change and what woud not.

- Tax shield : Suppression
- Wealth Tax : Simplication of the tax brackets (300 000 household incomes should no longer be submitted to the wealth tax)
The threshold would be established at 1,3 million euros of net taxable private assets.
Two tax brackets and two rates : bracket from 1,3 million to 3 million euros, taxed at 0.25%, and above 3 million euros, taxed at 0.5%. The Wealth Tax would be due starting the first euro.
The tax basis would not be modified. Art and professionnal assets would still be exempted, and the main residence would still benefit from a 30% tax allowance.
Suppression of the capping.

These modifications could come into force after the filing of the wealth tax return for 2011.

- Inheritance tax : Increase
The tax rate of the two last brackets (private assets between 0.9 and 1.8 million euros and above) would be increased by 5% : from 35% to 40% and from 40% to 45%.
The tax allowances up to 159 325 per child and per parent would be renewable every 10 years (actually every 6 years).
The advantages allowed according to the age of the donor would also be abolished. For example, the 50% tax decrease applicable to donors under 70 years.
- Exit Tax : Creation
Creation of a 19% exit tax, of which would be liable all tax payers who choose expatriation.
This exit tax would be assessed on latent capital gains on shares.

- Tax treatment of life insurance proceeds : no changes considered
- Dividends : unchanged withholding tax of 19%

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