Sarkozy Imposes Tax Hike On Foreign-Owned Second Homes
divingbboy
Posts: 14,074 Forum Member
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Surely, this can't be legal under European law, if what is said in this DM article is true (yes, 'grain of salt alert', as it is the DM):
http://www.dailymail.co.uk/news/article-2002503/Britons-French-holiday-homes-face-shock-new-tax-increase.html#ixzz1P4PN78wW
Britons with French holiday homes face shock new tax increase by Sarkozy
Britons will have to pay a new tax on their French holiday homes in a shock move by President Sarkozy, it was announced today.
The tax only applies to foreigners with second homes that are unoccupied all year whether the property is owned personally, through a company or a trust.
Sarkozy is introducing it to help raise revenues and improve his poll ratings.
The new charge was approved after a marathon debate in the National Assembly which ended as dawn broke.
But France's newly-affluent will pay less after it was agreed that no-one should be taxed more than 50 per cent.
Non-resident French homeowners already pay two taxes - one by the person who owns the house and the other paid by those who live in the property.
Under the new proposals, even if homes are only used for a few weeks a year, the French government will estimate the annual rent that could be gained, and then charge 20 per cent tax based on that sum.
If the property is let out for the whole year with a local letting agent, it will be exempt.
French property taxes vary by region, so tax payable on one in the South of France will be different from that in Normandy.
Those on the Riviera are likely to rocket, forcing owners to sell up because the property would become too expensive to run.
Already there is some debate whether the tax discriminates against foreign owners and that it will be challenged in the European courts.
Sarkozy won power in 2007 promising that tax would not rise, but he is under pressure as the April 2012 election looms to fend off Left-wing critics who say he helped a wealthy minority.
Without getting into a discussion of whether it is morally right that second home owners should pay higher property taxes, which is a separate issue, this doesn't seem legally any different to me than, say, the UK passing a law to the effect that all French citizens working in the UK must pay an additional 5% in income tax.
Any thoughts?
http://www.dailymail.co.uk/news/article-2002503/Britons-French-holiday-homes-face-shock-new-tax-increase.html#ixzz1P4PN78wW
Britons with French holiday homes face shock new tax increase by Sarkozy
Britons will have to pay a new tax on their French holiday homes in a shock move by President Sarkozy, it was announced today.
The tax only applies to foreigners with second homes that are unoccupied all year whether the property is owned personally, through a company or a trust.
Sarkozy is introducing it to help raise revenues and improve his poll ratings.
The new charge was approved after a marathon debate in the National Assembly which ended as dawn broke.
But France's newly-affluent will pay less after it was agreed that no-one should be taxed more than 50 per cent.
Non-resident French homeowners already pay two taxes - one by the person who owns the house and the other paid by those who live in the property.
Under the new proposals, even if homes are only used for a few weeks a year, the French government will estimate the annual rent that could be gained, and then charge 20 per cent tax based on that sum.
If the property is let out for the whole year with a local letting agent, it will be exempt.
French property taxes vary by region, so tax payable on one in the South of France will be different from that in Normandy.
Those on the Riviera are likely to rocket, forcing owners to sell up because the property would become too expensive to run.
Already there is some debate whether the tax discriminates against foreign owners and that it will be challenged in the European courts.
Sarkozy won power in 2007 promising that tax would not rise, but he is under pressure as the April 2012 election looms to fend off Left-wing critics who say he helped a wealthy minority.
Without getting into a discussion of whether it is morally right that second home owners should pay higher property taxes, which is a separate issue, this doesn't seem legally any different to me than, say, the UK passing a law to the effect that all French citizens working in the UK must pay an additional 5% in income tax.
Any thoughts?
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Comments
It may stop some of these people buying up housing just for it to stand empty for 10 months of the year or for them renting them out at extortion rents
Agreed, and I would go further with the "land value tax".
http://www.landvaluetax.org/what-is-lvt/
As I tried to say, I wasn't questioning the morality of such a tax (I live in the South West, where second homes are rife, so you can probably guess where I stand on the issue), but I find it difficult to see how this new law is legal. French second home owners don't have to pay it, only non-French owners.
I think it is different in that it's specifically targeted at holiday homes - hence the comment about "Under the new proposals, even if homes are only used for a few weeks a year, the French government will estimate the annual rent that could be gained, and then charge 20 per cent tax based on that sum. If the property is let out for the whole year with a local letting agent, it will be exempt." If someone were actually living and working in France, it would be their place of residence and not a holiday home - and therefore not subject to this tax. At least, that's the impression I get from the content of the article.
Given that we have a fair few "Cornwall exiles" in this neck of the woods, and one running sore is the purchase of holiday homes in Cornwall, I have some degree of sympathy with the proposal.
One of my friends owns a home in France and lives in it all year. Another friend owns a house there and spends two periods a year staying there. So neither of them will be affected. That's if it goes ahead.
If you had a French person who lived in Normandy, but who had a holiday home in Nice that they used a few times a year, they would not, apparently, have to pay the tax. If that same person was a UK citizen, they would have to pay the tax, regardless of the fact that their permanent residence was in Normandy. If that really is the case, then it appears to be a matter of direct discrimination on the basis of nationality, which is unlawful as between EU countries. I can certainly see why this is supposedly being challenged in the courts.
EDIT: just read this comment below the article. If true, then there's a good chance that the law would be legal under European law:
About time, but please Daily Mail, try for once to get all your facts right, this tax is for all non residents who own a second home in France and that home is not used either by the owners or rented out is subject to the taxation. Why should those who are resident in France who have second homes subsidise non residents to all the benefits of the commune for those who are non resident and do not use their properties either themselves or for others to rent for the greater part of the year. Spread the local taxes around amongst all owners whether resident or non resident.
This article suggests that the picture is a little more complex: it intimates that French ex-pats who are non-resident for tax purposes may also fall foul of the new legislation. As such, it may not be considered discriminatory, on the grounds that the criterion is one of residence and not of nationality.
It also suggests that the tax may not be as large as has been feared.
I'm Cornish, but live in Devon these days. I'd imagine that the second home issue is a major problem in places like Padstow, etc. In Devon, if you go to somewhere like Salcombe in the winter, the place is half dead because 50% of the population live elsewhere and only come down from July to September, and then again at Christmas.
What's the burglary rate like in towns like that? I would have thought it would be pretty high unless people empty the places out when they aren't there. Or perhaps criminals just don't like to travel?
As someone who lives in a village where over 60% of houses are empty throughout the winter,i would love to see this happen in this country!
In East Anglia is pretty low,but now people are starting to cotton on that in Winter there are properties ripe for burglary as we have started to see break ins more and more.
Yes. People who can afford to buy second homes and then have the gall to let them stand empty for the majority of the year should be subject to a hefty additional tax - money that can then be spent on builing affordable housing.
Well, good for the French, so long as it doesn't discriminate against other EU citizens who aren't French.
So there could be a market for better security systems? Hmm, that's good to know.
Hey, I may have left-wing sympathies, but that doesn't mean I'm going to give up an opportunity to make some money for my company, and exploiting rich people at the same time just makes it even more appealing
I am not against a few holiday homes,but when you start to see a village slowly die you have grown up in because more people holiday there than live,thus closing businesses andd schools
it can be heartbreaking.
I like your thinking
The burglary rate isn't that bad, surprisingly, but that's probably due to the fact that these places tend to be in rural areas. That said, the parents of someone I know actually had an entire outdoor hot tub stolen while they were away. The criminals would have had to have used a truck and a mobile crane to do the deed. They even capped the live wires after cutting them. How thoughtful.............
^ This. It's equally as sad when young locals cannot afford to live in the village in which they grew up because of the housing market.
That said, it's completely wrong to impose a tax that discriminates on the basis of nationality, if that's what Sarkozy is proposing (and I'm not sure that he is).
could be the recession and its gone up everywhere.
Surprised it's not against EU regulations. Saying that, I'd like to see a second-home tax implemented here. Apparently 1 in 3 new houses in London are being snapped up by Asian investors/speculators. Unfortunately, this inflow of money will drive property prices up, so our politicians will be quite happy to sit back and let it continue. The outlook for the decade ahead in this country just seems grim.
If they're not discriminating between EU citizens, then it shouldn't be against EU regulations. The way the original article was written, it sounded as though a UK citizen doing the exact same thing as a French citizen would have had to have paid a tax that the French citizen would not have, but now I'm not so sure, having read a couple more articles. In general, a tax on second homes is probably not a bad thing, though.
If the Property Community article I posted earlier is right, it ought to be okay - as they're saying it's based on residency, not on nationality. If so, it wouldn't fall foul of rules regarding discrimination.
What's the betting that the contractors who stole that installed it in another house in the next village?
I think one of the most interesting things about this present economic situation is that crime rates haven't increased as expected. Let's hope we don't reach a tipping point and find that none of us feels safe leaving our houses empty like I did during the last time that the Tories were in charge.
Same thing should apply here.