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France Readies CGT Reform

23 July 2013   (0 Comments)
Posted by: Author: Ulrika Lomas
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Author: Ulrika Lomas

French Budget Minister Bernard Cazeneuve has unveiled details of Government plans to reform the taxation of real estate capital gains in France, to give a much-needed boost to the country's stagnant housing market.

The main aim of the reform is to put an end to the current tax system, instated under the previous Government in 2011. This regime encourages property owners to delay putting their properties on to the market, for fiscal reasons, which has had "very negative" repercussions for the French housing market. As a result, the volume of property transactions has plummeted, and there has also been a corresponding reduction in home improvements undertaken following a change of ownership.

Due to apply from September 1, 2013, the Government's proposed reform will affect capital gains realized from the sale of real estate, other than a taxpayer's main residence and rental property.

Under the plans, the tax reductions accorded depending on the holding period will be more progressive in future. Furthermore, vendors will be granted total exemption from income tax on real estate capital gains after a 22-year holding period, instead of 30 years as is currently the case. In addition, a progressive reduction in social levies (the CSG general social contribution and CRDS contribution for the repayment of social debt) will apply, and a total exemption from social contributions will be granted after a 30-year holding period.

To amplify the effect of this structural reform, and to provide an immediate supply surge to the property market, an exceptional additional tax reduction of 25 percent will be accorded for sales realized between September 1, 2013, and August 31, 2014. Finally, the Government intends to abolish existing fiscal incentives encouraging constructible land retention, to boost the housing development market.

The Government aims to publish a fiscal instruction shortly, setting out the precise modalities of the planned tax reform. The proposals are to be integrated into the country's 2014 finance bill.


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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