9 juin 2008

French Tax on Real Estate

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SpeakerChristophe Le BonInternational Tax PartnerTAJ (Deloitte member firm)Paris

My main message

Taxes on real estate have to be taken care of in any real estate investment in France. The overall tax burden is comparable to those of other countries. The French tax system offers to foreigners, including Kuwait investors, various opportunities to mitigate such burden. It is always a matter of planning.

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Main Features of the French tax system

French Tax Treatment of Real Estate Transactions

Specificities for Kuwaiti Investors

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Main Features of the French tax system

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Main features of the French Tax System (1)

• Taxation of income

• Individual non-EU resident: up to 40% (33 1/3 % on

capital gains)

•Companies: 33 1/3% / 34.43%

• Indirect Tax / Transfer Tax

•VAT: 19.6%

•Transfer tax: 5.09% (asset), 5% (share of PropCo)

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Main features of the French Tax System (2)

• Local Tax

•Territorial taxes on Real Estate

•Tax on added value

•Tax on Real Estate

•Wealth tax (for individuals): from 0.55% to 1.8%

•3% tax (for companies)

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Specificities for Kuwaiti Investors

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Specificities for Kuwaiti Investors

• Taxation in France of capital gain on French real estate and

shares in French real estate companies

• Withholding tax exemption on dividend and interest

repatriated from France to Kuwait

• Wealth tax exemption if other investment of similar amounts

made in shares of EU listed companies and/or instruments

issued by EU States

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French Tax Treatment of Real EstateTransactions

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French Tax Treatment of Real Estate Transactions

Seller Purchaser (*)

Asset Deal

Capital gain:

- company 33.33% / 34.43%- individual 16% (1/3 if not EU

resident)

- Transfer tax: 5.09%(+ ancillary fee / costs)

or VAT- Step up in basis

Share Deal

Capital gain:- company 33.33% / 34.43% (or exemption depending on

residency)- individual 16% (1/3 if not EU

resident)

- Transfer tax: 5%(or fixed fee if operating

company)- No step up in basis

(*) Except for real estate dealers

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Q&A