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PROPOSED
CHANGES TO CAPITAL GAINS TAX (CGT)
The
following changes are proposed to the law concerning CGT.
If retained, these new provisions will be introduced by the 2004
Finance Law and will apply to all
sales
made from
1st January 2004
.
1)
For those resident in
France
, the CGT declaration will no longer form part of the
income tax return. Instead the
tax will be calculated when the deed of sale is registered and taken from
the sale’s proceeds (as is the case for non-residents);
2)
The exoneration from CGT will be reduced
to 15 years of ownership (from 22). The
same rules on tapered relief will apply up to the fifth year (e.g. none
for the first two years and then 5% per annum).
However, after the fifth year the tapered relief will be 10% per
annum;
3)
A fixed reduction representing works of
15% of the purchase price of the property will be applied, replacing the
old system (offsetting of invoice or 3 x cost of materials).
The coefficient of monetary erosion will no longer be applied and
instead a tax free band of 10% per year the property is owned beyond the
fifth year will be applied;
4)
For those resident in
France
, a rate of 16% will be applied to the taxable amount
(currently the rate is in accordance with the overall income position);
5)
The more significant exonerations will be
maintained, notably that relating to the selling of a principal residence;
6)
The sale of property of which the price
is less than or equal to 15,000 Euros will be exonerated;
7)
The taking into consideration of any
inheritance/gift tax paid to determine the purchase price;
8)
The
application of a fixed tax free band of 1,000 Euros on the amount of the
gain.
Source:
La semaine juridique, no. 41, 10th October 2003
21/11/2003
- Legal update
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