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Tax Agent Obligation to be Abolished

The French government is to abolish the requirement for residents of the EEA to appoint a tax agent on the sale of a property in France.

Numerous laws in France require that non-residents are obliged to appoint a représentant fiscal (tax agent) in relation to certain of their dealings with the French tax authority

Companies operating in France will be familiar with the rule, but it also applies equally to non-resident individuals, notably in relation to the sale of property in France.

The obligatory representative frequently comes as some surprise to sellers, as the cost is frequently in excess of 1% of the selling price of the property and often a lot more.

Only where the sale value of the property is less than €150K, or for properties owned for at least 30 years (and thereby exempt from capital gains tax) is dispensation granted from this rule. Private companies are always required to use a fiscal agent.

The role of the tax agent is simply to verify that the correct amount of tax is being paid on the transaction, despite the fact that, for those who are resident, this is a task that is undertaken by the notaire.

These representatives are accredited private companies and as they are relatively unknown to non-residents they are frequently appointed by the notaire at the time the sale takes place, often without even consulting the seller, a practice of dubious legal validity!

In 2011, in a case concerning Portugal (where the same procedure applies), the European Court of Justice ruled that the requirement to use these agents was contrary to European law, as it is discriminatory and against the free movement of capital within the EU.

Since this judgement there has been pressure on the French government to abolish the requirement for a tax agent to be appointed.

As a result, the proposed abolition of this requirement is included in the draft Finance Bill that is currently making its way through the French Parliament.

The bill proposes that the obligation to appoint a tax agent should cease with all sales that take place from 1st January 2015, for all citizens of the European Economic Area (EEA).

The obligation is also abolished in relation to wealth tax from the same date and for income tax and companies' tax for 2014 income.

Residents of countries outside of the EEA will continue to be obliged to appoint a tax agent.

If you remain obliged to use a tax agent and you would like assistance in the selection, you can e mail us at editor@french-property.com and we will put you in contact with suitable agents, with whom we have been able to negotiate preferential rates for our readers.

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This article was featured in our Newsletter dated 04/12/2014

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