British owners of holiday homes in France are to be hit with punitive tax rises under plans announced on Wednesday by the new Socialist government.
The Telegraph [UK]
04 Jul 2012
Approximately 200,000 Britons own second homes in areas such as the Dordogne and other parts of France, particularly those serviced by budget airlines.
Now, however, holiday home owners find themselves in the sights of President François Hollande as he seeks to tax the better-off to reduce France’s large budget deficit.
On Wednesday the French government announced it was to increase taxes on foreign-owned second homes. Tax on rental income would rise from 20 per cent to 35.5 per cent, and capital gains tax on property sales would rise from 19 per cent to 34.5 per cent. The extra in each case is being labelled a “social charge”.
A Treasury source said on Wednesday night: “We will need to study the details. But we will of course challenge any proposal which breaches European single market laws and anti-discrimination rules.”
It is understood that President Sarkozy proposed a similar tax increase last year which was also challenged by the British Government.
The rise in tax on rental income will be retrospective, from Jan 1 this year. The increase in capital gains tax applies from the end of this month, meaning property owners will have little time to escape the increased tax by selling their homes.
David Cameron infuriated the French last month by promising Britain would “roll out the red carpet” to wealthy French citizens and companies who wanted to emigrate and pay their taxes in Britain…
The article continues at The Telegraph.
France’s two-week-old Socialist government unveiled 7.2 billion euros ($9 billion) of tax increases to meet deficit-reduction goals and avoid bond-market punishment.
The 2012 measures, approved at a Cabinet meeting today, presage even larger tax increases and spending cuts next year in an economy that’s barely expanding.
The largest new levy will be a one-time surcharge on wealthy individuals’ assets to raise 2.3 billion euros. Another 898 million euros will be reaped by ending a payroll-tax holiday. Other steps include surcharges for oil and financial companies, each raising an additional 550 million euros, and a levy on dividends and stock options…