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French Taxation

French Wealth Tax Exemption for Expats

Friday 15 May 2009

Those who relocate to France are now relieved from liability from French wealth tax for five years.

The change has been introduced in an effort to tackle the image of France as a high tax country.

The French wealth tax is called Impôt sur la solidarité fortune - ISF.

The new rule has been backdated to anyone who has relocated to France since 6th August 2008.

It will apply to the 31st December of the fifth year you relocate to France.

Existing expats who were resident in France before 6th August 2008 will not benefit from the concession.

The exemption will apply irrespective of your nationality, or the country from which you relocate.

However, the exemption will only be granted if you have not previously been resident in France during the past five years. Accordingly, if you were resident during this time, but left and have returned, the exemption will not apply to you.

Neither will the exemption apply if the value of your assets in France exceeds the threshold for liability to the tax. In short, it only applies to assets held outside of France.

President Sarkozy has made clear his own dislike of this tax, whose application he has progressively weakened since he came to office.

The tax is now index linked and, in the calculation of your wealth, there is a 30% discount against the value of your principal home. There are also other business related allowances.

The tax is payable if you have net assets greater than €790,000.

The French wealth tax is one for which both residents and non-residents alike are liable.

If you are resident, and you do not quality for exemption under the 5 year rule, then your worldwide assets are included in the calculation; if you are non-resident, then only those assets located in France are included.

You can read more in our guide to French Wealth Tax.

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