The taxe d’habitation is being abolished for most households, but the taxe foncière is not facing the same fate, so what might you expect to pay this year?
Last month, all home-owners in France received their annual rates bills.
Whilst many will have been delighted to see little or no charge levied for the taxe d’habitation, that was not the case for its sibling, the taxe foncière.
On the contrary, there have been numerous press reports in France about substantial increases in the tax, which critics argue is being increased to compensate for the loss of revenue from abolition of the tax d'habitation.
Behind the stories was a report published by the association of landlords in France (Union nationale des propriétaires immobiliers - UNPI), pointing out that proceeds from the tax have risen 35% in the last ten years, when inflation has been less than 10% over the same period.
Even by the government's own figures, between 2012 and 2018 receipts from the tax rose by 23%, to reach €33.6 billion.
UNPI stated that this year there has been a "coup de force de l’administration", with increases averaging 15% to 20% that are being used to compensate local councils for the reduction in the taxe d’habitation.
It is an alarming and potentially plausible supposition, but closer examination shows that it is not quite that simple
How is the Tax Calculated?
The level of the taxe foncière each year is determined by three elements:
- the annual revision of rateable values (revalorisation forfaitaire) determined by the government;
- the percentage rate (taux d'impostion) or multiplier that is applied to those values by local councils and;
- any changes in the rateable value of a property due to major improvements that may have been carried out by the owner.
We can consider the influence of each of these elements on your rates bill.
In terms of the annual revision, according to a report produced recently by the Banque Postale, between 1986 and 2018 out of an annual average increase of 4.1% in receipts from the tax only 1.2% per year has been down to the annual inflationary increase in rateable values.
The authors argue that main reason why receipts from the tax have risen has been due to the increase in the physical infrastructure - the new build housing stock and other new commercial and industrial developments - that have taken place.
That is a view supported by the local councils association, the AdCF, who have stated: "Le principal facteur d’augmentation des produits de taxe foncière est la croissance de notre parc de logements et de locaux professionnels."
This year, rateable values (valeurs locatives) have been increased nationally by 2.2%, in line with the increase in the retail price index, as permitted under the law. It increased by 1.2% in 2018, 0.4% in 2017 and 0.1% in 2016. Over the last five years it has increased by nearly 5% and over the past 10 years by 15%.
Beyond any revision of local rateable values, as part of their annual budgetary process each local council (municipalities, inter-municipal councils and departments) decides the percentage multiplier to apply to the rateable value, which is then used to determine the rates payable. Each council has their own multiplier.
In most cases, the multiplier is increased each year, but it may remain unchanged, or even reduced; it depends on the outcome of the budget review by each council.
This year, out of 95 departments in mainland France, the rate applied by the departments (the main multiplier) has remained unchanged in all but five departments, and in three of those it fell.
There will have been some changes in the rate at a municipal or inter-municipal level, but outside of the metropolitan areas the implications on the rates bill will have been minor.
On average departmental rate has increased by 10.63% in the period 2013-2018, according to government figures.
However, in some departments rates have increased signficantly over the past 5 to 10 years, notably in the Hautes-Alpes, Ille-et-Vilaine, Lozère, Deux-Sèvres, Yvelines, Val-de-Oise and Val-de-Marne. There have also been some substantial increases in many major cities and large towns, eg Paris, Lille, Nice, Nantes.
In large measure the increase in the 'taux' applied by departmental councils has been to replace the reduction in grant support from central government, down by €8.5 billion between 2013-2019.
In parallel, the departments have been required to pick up the burden of significant rises in social support payments to the elderly for the 'allocation personnalisée d'autonomie (APA).'
Some of the recent increases in the larger cities have also been caused the reorganisation of local government that has occurred since 2015, with the creation of new metropolitan authorities.
In addition to the annual rise for inflation, the rateable value of a property is also increased where major improvements are carried out, eg, garage, swimming pool, central heating etc.
The alacrity with which local tax offices apply these home improvement based increases varies, but, according to the government, around 15,000 rateable values are revised each year, a figure that has remained fairly constant for many years.
This year, however, many thousands of households in the Isère department of France (Auvergne Rhône-Alpes) found their rates bill had risen substantially as a result of a major review of local rental values carried out by the tax office in the department.
Although few of those affected by the increase had recently declared home improvements, it seems that the tax office was clearing a backlog that went back many years. The increase was not applied retrospectively.
The increases that occurred in this department were the inspiration for the press stories that it was happening right across the country, which has not been the case.
This year the Macron government have started a general rates revaluation of residential properties, which it is planned to complete in 2026, when a new system of local government funding (yet to be announced) will be put in place. Successive governments have been putting off such a review.
Not surprisingly, there have been dire warnings of rates bills rocketing when it is completed, and although many households will find that their bills do rise, the government have stated that they will put in place transitionary arrangements to phase in any increases.
Households most likely to be affected will be those who own older properties, which have not been reviewed since 1970, when the last rates review was carried out.
The local councils through the AdCF also state that it is not the objective of the revaluation to increase receipts to local councils, but to improve equity between households, stating: "La révision des valeurs locatives n’est pas faite pour gonfler les recettes des collectivités mais pour recréer de l’équité entre contribuables à produit fiscal constant."
How Much do You Pay?
Information on average rates bills is not yet available for 2019, but the table below shows the average rates payable in each department of France in 2018. It is going to be much the same for 2019.
The level of the tax last year varied from between €3,228 in Seine-Saint-Denis to €889 in the Vendée. These two figures are extremes, with the rates bill in Seine-Saint-Denis explained by the high level of poverty in the department and the considerable social support obligations imposed on the council.
On average level of the taxe foncière per household was €1,573.
|Taxe Fonciere 2018|
|CENTRE-VAL DE LOIRE|
|HAUTS DE FRANCE|
|Val d'Oise ||€2,345|
|Creuse || €905|
|PAYS DE LA LOIRE|