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French Taxation

French Taxes on Sale of Building Land

Wednesday 01 July 2009

The sale of building land in France incurs not only a potential liability to the payment of capital gains tax, but also to a development tax.

The taxe communale sur la plus-value de cession des terrains nus rendus constructibles was introduced in 2007 and applies to the first sale of land that has been zoned for construction.

The aim of the tax is to allow the local council to share in the additional value of land that becomes zoned for construction through a local plan and to assist with infrastructure costs associated with zoning of land for development.

Critics of the tax argue that local councils already benefit financially from new construction through the local planning taxes that are imposed, their share in stamp duty, as well as the additional revenues they obtain through the rates that become payable.

This seems to be view held shared by most councils, for the introduction of the tax is at the discretion of the local councils, and so far around only 5000 councils have decided to introduce it. Clearly, many do see it as being a deterrent to development, as less than 20% of local councils have decided not to adopt it.

The rate of the tax is 10% on two-thirds of the sale price, less costs of purchase and transaction costs.

Thus, broadly speaking, on building land sold for €120,000, with an original cost of €20,000, the seller would be liable for €6,667 in tax (€100,000 x 2/3 x 10%).

If the land has been owned for less than fifteen years, then capital gains tax is also payable on any gain realised on the sale, with no deduction for the development tax that is also payable. Accordingly, the tax is not taken into account in calculating liability to French capital gains tax.

The tax is applicable against both residents and non-residents.


There are a number of important exemptions from the tax, which we can only summarise here.

Land sold for less than three times the price of acquisition.

Exempt from the tax are elderly or disabled persons on a low income who would not otherwise be liable for capital gains tax.

Neither does the tax apply where it is gifted to the beneficiary.

It does not apply where it is sold less or equal to €15,000.

On land sold at least eighteen years after zoning as development land.

It is not payable if an existing building on the land formed an integral part of the home of the owner.

Finally, it is not payable by property developers, as the government considers that property and construction companies pay taxes through the profits they realise on the sale of any subsequent development on the land.

You can read more in our guide to Capital Gains Tax In France.

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