Francetaxlaw

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A promise to sell (promesse de vente) becomes null and void if the sale is not completed and the suspensive condition is not fulfilled within the period stipulated by the parties. (Cass civil 06.06.2024).

After signing a promise to sell a building subject to suspensive conditions in 2012, the parties postponed completion until the 31st March 2018 by five successive amendments.

As the sale was not completed by that date, the parties disagreed as to whether or not the promise had expired. In the buyer's view, the promise did not expire because, under the terms of the promise, the date set for signing the notarial deed was not extinctive but constituted the starting point from which one of the parties could oblige the other to perform by issuing a formal notice.

On the contrary, the Court of Cassation ruled that the promise had expired under the terms of the contract, notably that the last amendment provided for a deadline for completion, the suspensive condition was not fulfilled before that date.

I have been subject to a lot of defamation this week on social media by people who do not seem to understand the concept of working in the UK with a title. You will see from the files my diploma of Notaire passed in 2012. Since I have been working for Notaires and more recently for Francetaxlaw.

A Notaire is a person who has an office in France and is appointed by the Minister of justice. In any case I called myself a Notaire because I am not allowed. Instead, I use the words qualified Notaire, or in French Diplome Notaire.

In my correspondences or posts, the words qualified Notaire is used, meaning Diplome Notaire. A person who is “diplome Notaire” or “qualified Notaire” passed their exam but are not registered on the French Notaires’ database if they are not salary Notaire or own their own practice.

A qualified Notaire can work for a Notaire as a Notaire assistant. He is still qualified as a Notaire and will often sign his emails or letters with the wording Diplome Notaire.

As far as any ban is concerned, there is no ban from me for working in the UK and the Regulatory authority is fully aware of
Francetaxlaw and has not objected to any activity carried out in the UK in the legal industry.

Decision High court of Justice (Cassation) on the 7th March 2024 regarding the payment of a deposit to the vendor as a penalty clause/indemnity .

If the initial contract (Promesse de vente) provides that the deposit (indemnite d’immobilisation) will be allocated to the vendor, when completion does not take place, and after the purchaser has been summoned, the deposit is not due to him in the absence of a summons, even if the purchaser’s refusal to complete has been established.

In practice, the deposit remains payable to the vendor in the event of non-fulfilment of the contract by the purchaser. However, in this case, the contract conditioned the payment of the sum withheld in favour of the vendor, to a summons to sign the deed, with no possibility of derogation..

When calculating capital gains tax on the sale of a French property, the vendor who owns it for more than 5 years is allowed to increase the purchase price by 15%. This is a "lump sum for works" that can be used automatically for any sale of a built property that the vendor has owned for more than 5 years (CGI, art. 150 VB, II, 4°).

In a decision made by the High Court (Conseil d’Etat) on the 25th March 2019, a taxpayer wanted to apply the flat-rate increase. The tax authorities refused on the grounds that no works expenditure had been incurred. The High Court ruled in their favour.

The Court of Appeal of Pau rendered a similar decision on the 15th April 2024.

It is not recommended when a Notaire drafts a contract, to ensure that the vendor declares that he has carried out some work on the property since he owns it. According to the court, while the absence of proof of work does not prevent the flat-rate tax from being applied, the seller's declaration that no work has been carried out is sufficient to prevent the flat-rate tax from applying.

Logically, the vendor is not entitled to request that the original purchase price of the property is increased by 15% for works that he himself claims not to have carried out.

Capital gains on property and application of the 15% fixed-rate works charge to the purchase price.

The gain made on the sale of a property is calculated in different steps and represents the difference between the sale price and the original purchase price (excluding the value of contents), which is revalued by adding some cost, such as the notary’s fees and renovation work. Notaries’ fees are often calculated by applying a flat rate of 7.5% of the purchase price. There is no difficulty to add 7.5% and it is usually higher than the real cost paid by the purchasers on the purchase.

Then you add to the figure any cost related to construction/improvement/renovation. As far as costs of major improvements are concerned, the rules are set out in the French Tax Code (Code General des Impots) and have also changed over the past few years to restrict the right for vendors to deduct any work carried out. The rules are now clearly detailed as follow:

Either you deduct a flat rate of 15% for the work carried out on existing property and owned for more than five years (in that case you do not need to prove the works that you did),

Or, you provide the list of the actual cost on the property but deduction will be permitted under certain conditions set out in article Art. 150 VB §II 4° of the tax code.

In one case, the Pau Administrative Court (TA Pau, Chambre 1, 15 April 2024, no. 2201290) ruled out the application of the fixed-rate works charge on the grounds that the taxpayer had declared in the deed that he had not carried out any works.

Airbnb tax reform: The Senate adopts the Bill

For reference, the proposed law aimed at "remedying the imbalances in the rental market in tense areas" was adopted by the National Assembly on 29 January 2024.

At the Senate, the proposal was renamed: "Proposal to strengthen the regulatory tools for furnished tourist accommodation".
This bill was adopted by the Senate on the 21st May 2024 and proposes the following rules:

- Rentals of furnished tourist accommodation called “classes” would benefit from an allowance of 50% up to a limit of 77.700€ of annual revenue.

- Rentals of furnished tourist accommodation called “non classes” would benefit from an allowance of 30% up to a limit of 23.000€ of annual revenue.

The text adopted by the Senate adds the following: "This article applies to income received from the 1st January 2025.

Article 4 of the proposed law, which had been adopted by the National Assembly, stipulated that the capital gain on the sale should be increased by the depreciation applied since the date on which the business of renting out furnished tourist accommodation began.

Method of payment of inheritance tax

Assets received in bare ownership: the option for interest-free deferred payment of tax is irrevocable

Whenever a taxpayer receives the bare ownership of a property as part of an inheritance and opts for the deferred payment of inheritance tax with interest waived, this choice is irrevocable. (Cass. com. 13-3-2024 n° 22-16.190 F-B)

The option between the deferred payment of inheritance tax, based on the taxable value of the bare ownership of the assets on the day the inheritance is opened, with payment of annual interest, and the deferred payment of inheritance tax, based on the taxable value of the entire ownership of the assets, with exemption from interest, is not a tax advantage but a method of paying tax.

https://www.francetaxlaw.com/news/declaring-foreign-trusts-in-france/

Declaring Foreign (Non-Resident) Trusts in France Foreign trusts are a useful tool. However, it is crucial that you fully understand your obligations. Here's how to set up your trust and properly declare it in France.

https://www.francetaxlaw.com/news/2024-changed-to-french-inheritance-law-for-expats/

Changes in French Inheritance Law: What UK Expats Need to Know in 2024 For UK expats living in France, staying up to date with French inheritance law is crucial for succession planning. Here's what you need to know for 2024.

https://www.youtube.com/watch?v=PufboNltYnE

Retraités expatriés : comment sont imposées vos pensions de retraite ? Conférence du salon S'expatrier, Mode d'emploi du 6 mars 2024 animée par la Direction des Impôts des Non-Résidents

The Decree no. 2024-284 of 29 March 2024 creates a new obligation for Notaires or agents drafting preliminary contracts of sale (Promesse de vente or Compromis de vente)

As a reminder, a property owner of a dwelling house and land located near a wooded or forested areas is required to clear the undergrowth within a radius of up to 50 metres around their buildings under the legal obligation to clear undergrowth (OLD). The same applies to properties located in sectors defined by a forest fire risk prevention plan (PPRIF).

The Notaire or agent will have to attach to the contract a sworn statement from the owner declaring that this obligation has been met in compliance with the legal and regulatory requirements. Failure to comply with these obligations exposes property owners to fines.

Mon époux a récemment été diagnostiqué de la maladie d'Alzheimer. Nous projetons de vendre nos biens et de faire des donations à nos enfants dans les prochaines années. Vais-je pouvoir réaliser cela seule, les décisions de mon conjoint étant parfois altérées, ou dois-je faire des démarches particulières ? Nathalie Couzigou-Suhas, a répondu à cette question sur RMC Info Talk Sport dans l'émission Estelle Midi 👉 https://www.youtube.com/watch?v=lVmmatWcTxI

Nice test day at PFI Nottingham for the first race of the year

TAXE ANNUELLE DE 3% - LEGAL ENTITY

A tax equal to 3% of the market value of the real estate held is payable each year by any French or foreign legal entity that owns, directly or indirectly, real estate in France, whether built or not, or rights over such real estate (Articles 990 D to 990 F of the General Tax Code).

What exactly is the 3% annual tax?
An annual tax of 3% of the market value of the real estate held is payable by all French or foreign legal persons who own, directly or indirectly, real estate in France, whether built or unbuilt, or rights in rem relating to such real estate (Articles 990 D to 990 F of the General Tax Code).

In addition, all legal persons interposed between the tax debtor(s) and the real estate or rights in rem are jointly and severally liable for the payment of this tax (Article 990 F of the CGI).

When is the tax owed?

Declaration no. 2746, indicating the place, location and nature of the property or rights held by the entity on the 1st January of the year in question, must be submitted, together with the payment, by the 15th May of each year at the latest.

All entities are affected

All legal entities, regardless of whether they are based in France or abroad.

The only exceptions are the companies covered by article 1655 Ter of the CGI (sociétés d'attribution).

Exception:

Buildings used for professional activities other than real estate by the company that owns them or by another legal entity in the same group are excluded from the tax base;
Stocks held by real estate agents or developers: 990F of the General Tax Code (however, these properties are taken into account in the calculation of the ratio of properties in which the company has a majority holding).
All real estate holdings are covered, whether direct or indirect.

Exemptions

Entities exempt by nature (Art. 990 E 1, E 2 a) and E 2 b) of the CGI)
International organisations ;
Sovereign States and their subdivisions;
legal entities and bodies or institutions controlled directly or indirectly by a sovereign state; - legal entities whose real estate assets are not predominantly real estate assets, i.e. whose real estate assets represent less than 50% of all French assets held directly or indirectly;

Legal entities whose shares are substantially and regularly traded on a regulated market and their more than 99%-owned subsidiaries, subject to the following conditions:
Companies having their registered office in the EU: see the list published in the Official Journal (Annex);

Companies with registered office outside the EU: the stock exchange must meet the criteria of an EU regulated market (exhaustive criteria).
Entities whose exemption is conditional on the location of their registered office (art. 990 E 3) of the CGI):
Common condition, entities having their registered office in :
The European Union ;
Or a third country or territory that has signed an administrative assistance agreement with France to combat tax evasion and avoidance (see BOI-ANNX-000349);
Or a country that has concluded a treaty with France allowing them to benefit from the same treatment as entities having their registered office in France (see BOI-ANNX-000350);

When a deceased leaves assets abroad, the question arises as to whether these assets should be included in the French inheritance tax form.

Obviously, if these assets are taxable in France under article 750 ter of the CGI or under a bilateral tax treaty, the answer is positive.

Similarly, if the French inheritance tax has to be calculated on the basis of an effective rate that includes foreign assets, the answer is also yes.

But what if the foreign assets are not taxable in France?

Due to the general scope of articles 800 of the CGI (obligation to declare) and 802 of the CGI (declaration of good faith), the declaration of inheritance must, in principle, include all the assets left by the deceased (BOI-ENR-DMTG-10-60-10 and BOI-ENR-DMTG-10-60-30), even if these assets are not subject to tax in France by virtue of an international treaty (BOI-ENR-DMTG-10-50-70 no. 140).

Therefore, even if the foreign assets are not subject to tax in France, they must be included in the inheritance declaration.

Failure to comply with Article 802 of the CGI is punishable under Article 1837 of the CGI (up to three years' imprisonment and a fine of €45,000 in the case of fraudulent misrepresentation).

: ou ? Quelles différences ? En cas de décès, quelle union est la plus protectrice ? Me Stéphanie Jeanjean-Boudon, et Secrétaire du bureau du , a répondu à ces questions sur RMC Info Talk Sport dans l'émission Estelle Midi : https://www.youtube.com/watch?v=-dH-ONFeRAE

BREAKING NEWS.

After 15 years, the international estate of the famous composer Maurice JARRE is finally closed!

This case was followed by that of Johnny Halliday and we have all been waiting for the final decision of the judges.

It is now done. In a decision dated 15 February 2024, the ECHR has definitively closed the door for the children of Maurice Jarre to access and inherit his estate.

No fraudulent abuse of the law ... no right of extraction ... no exception of international public policy ... no violation of human rights. The ECHR does not recognise the existence of a general and unconditional right for the children to inherit part of their parents' estate.
Last but not least, this decision will affect how international public policy is assessed in the context of the European Succession Regulation No 650/2012. Indeed, the question arose as to whether or not the Jarre jurisprudence would be upheld in the context of this Regulation. This question has now been answered.

We can assume that the right of inheritance introduced in 2021 will not be maintained. However, there is still a long way to go before the French government takes note of this.

https://hudoc.echr.coe.int/eng #{%22itemid%22:[%22001-230875%22]}

SALE OF A PROPERTY AND ACCEPTANCE OF AN OFFER

The difficulty of obtaining a consent before signing a preliminary contract has again been subject to a new decision from the High Court of Justice on the 18th January 2024. The owner's signature alone on the offer to purchase was not sufficient to establish completion of the sale where there was no express mention of acceptance of the offer and where the prospective purchaser had not informed him of his financing, which was a determining factor in his acceptance.

A forestry group entrusted the sale of several plots of land to a real estate agency. In an e-mail sent by the agency to the seller, a company made an offer to buy the land at the price requested. The seller replies to the agency that he is in favour of the offer but would like to know what the buyer's financial package would be.

The agent sends the buyer an email containing his own purchase offer, signed by the seller and with the contact details of his solicitor, and in the same message informs the buyer that the seller has received competing offers and is awaiting a proposal from another candidate. At the same time, the buyer had received an
agreement in principle from his bank, but this did not appear to have been communicated to either the agency or the vendor.

When the seller failed to follow up, the buyer sued the seller and the agency for forced sale, and the Court of Appeal concluded that there had been no perfect sale.

The Court of Cassation confirmed this. By stating that he wanted to know the buyer's financial package, the seller was expressing the fact that this information was crucial to his acceptance. However, the prospective buyer did not provide him with any further information in this regard. Furthermore, the buyer was informed of the existence of other negotiations with competing buyers. Finally, the seller's signature was not sufficient to complete the sale as there was no express mention of acceptance of the offer.

The interest rate applicable to applications for fractional or deferred payment of inheritance tax made in 2024 is set at 2.2%.

For applications made in 2024, the interest rate applicable to fractional or deferred payment of registration tax will be

- for the basic rate, 2.2% (compared to 1.7% for applications made in 2023);
- for the reduced rate specific to business transfers, 0.7% (compared with 0.5% for applications made in 2023).

These rates apply for the entire duration of the loan.

CAPITAL GAIN TAX ON PROPERTY

I am often asked the same question regarding the calculation of capital gain tax on the sale of a property. Can I deduct the work that I carried out on my property from the gain?

Yes you can, under several conditions:
1 Only the construction, reconstruction, extension and improvement work,

2 paid by the vendor/owner of the property,

3 And carried out by a French registered artisan/enterprise are deductible.
(based on receipts, which must cover the installation of materials and not just the purchase of materials).

It means that maintenance and repair work are not deductible!

Please bear in mind that replacing an existing kitchen or bathroom is often rejected by the tax office and is considered as refurbishment, not improvement work.

Also, work that has already been deducted from your income tax or that has been included in the basis for a tax credit is not deductible!

The new season is approaching, time to test and be ready for the championship

FRENCH CAPITAL GAIN TAX – Decision from the Conseil d’Etat 29th November 2023

The Conseil d’Etat was consulted to give their opinion on a question of exemption of Capital gain tax for a non-French resident, who claimed exemption of CGT in accordance with article150 U, II-2o of the tax code.

A British resident sold his property in 2012 and claimed the exemption of capital gains tax applicable at the time to non-residents based upon article 150 U, II-2o. The said article provides that a vendor who has been resident in France for tax purposes for two consecutive years and had been at liberty to dispose of the property since the 1st January of the year preceding the sale can benefit from an exemption of CGT (CGI art. 150 U, II-2o).

The tax authorities challenged the exemption on the grounds that the owner had not fulfilled the condition of free disposal of the property because it had been rented out for a few days in the summer of 2012. The lower courts upheld the administration's position, ruling that the letting of the property to holidaymakers for a couple of weeks for a rent of €45,000 deprived the taxpayer of the free disposal of his property, without prejudice to the fact that the rental was temporary.

The Conseil d’Etat ruled out the decision of the Court.: the lower courts should have considered whether the occupation of the property by a third party could be considered negligible in view of its duration, frequency and the other conditions under which it took place, thus allowing the taxpayer to retain free disposal of the property.

🤔 Connaissez-vous exactement le rôle de votre notaire ?

Le notaire est un professionnel du droit qui authentifie les actes juridiques. Il offre des conseils et garantit l'authenticité des documents, renforçant ainsi la sécurité juridique.

Il joue un rôle dans différents aspects du droit de la famille, du droit des sociétés, du droit rural et du droit des collectivités locales.

Notre profession est détaillée sur notre site web 👉 https://chambre-interdepartementale-de-savoie.notaires.fr/

Buying property through a société civile immobilière is becoming increasingly common in France, for both civil and tax reasons.

The manager of a société civile immobilière (Gerant), who may or may not be one of the shareholders, does not necessarily have the power to sell a property owned by the company.

In principle, his only role is to manage the company and he can only sign those documents that fall within the list set out in the articles of association.

A Société Civile Immobilière (SCI) allows a group of shareholders to jointly create and manage a property portfolio. Its civil purpose excludes the application of the Commercial Code. This legal form can be used to avoid making profits in order to avoid the application of the rules on co-ownership, or to make profits in order to rent out unfurnished or furnished accommodation, or to build properties with a view to resale.

Although SCIs are often family-owned, they should not be exempt from legal rules and formalities. This is the message that France's highest court wants to send. The judges have just agreed that the director may only carry out acts expressly provided for in the articles of association. All other acts that could logically fall within the scope of property management are prohibited.

France's highest court goes on to point out that the manager does not have all the powers. "The possible acts - acquisition, management, operation - are listed in the statutes and, if sale is not included, it can only be carried out following a decision of the general meeting taken unanimously by the shareholders. The director must not think that he can do anything that is not excluded from the company's objects".

It is important to consult a notary before setting up a non-trading property company (société civile immobilière) to ensure that the articles of association are drafted correctly and to allow the manager, if he wishes, to sell the company's property. This is usually suggested when the manager is also a shareholder in the company.

https://www.legifrance.gouv.fr/jorf/id/JORFTEXT000048706693?fbclid=IwAR2WIxRSj_sAYG7ZIj2dFB94zwlZ1j32_7oYxF7xOch56V6dwavdyW0Wxq4

Décret n° 2023-1297 du 28 décembre 2023 relatif au code de déontologie des notaires - Légifrance Décret n° 2023-1297 du 28 décembre 2023 relatif au code de déontologie des notaires

Christmas is the time for gifts and donations of money. Grandparents are always generous with their grandchildren.

In addition to the common gift (present d’usage), which is usually not taxable because it represents a gift made for a birthday, celebration or christmas, a grandparent can make two types of gift:

A gift under the ordinary law (donation de droit commun) exempt from all taxation up to €31,865 and a family gift (don familial), allowing the same amount to be accumulated 4 times every 15 years: 2 times €31,865 by each grandparent, i.e. a total sum of €127,460 per grandchild without the slightest taxation.

Gifts under ordinary law can be made by gifting real estate, money or portfolio.

There are several conditions to be met for family gifts:
- the donor must be under 80 years old,
- the grandchild must be over 18 years old.