Title to land in France is registered and registration of a sale is by publication of the Acte de Vente which must be prepared by a Notaire. The Notaire acts as a neutral public officer, charges a scale fee, is responsible for searches and enquiries before completion and is accountable to the authorities for registration duty payable on the purchase as well as for the vendor's capital gains tax liability. Where the purchase price passes through the notaire's account the purchaser is guaranteed clear title.

Before the Acte de Vente is signed it is usual for the parties to sign either a Promesse de Vente, which is an option to purchase, or a Compromis de Vente which commits both buyer and seller. This contract is normally prepared by the estate agent rather than by the Notaire, but whoever prepares it, it will need careful scrutiny as there is no set form and its terms are often a matter for negotiation. Its provisions will include warranties by the vendor, the general terms of sale and conditions protecting the purchaser against such matters as inability to raise finance. A deposit, usually of 10%, is payable at this stage, preferably to the notaire, the balance being payable at completion. At completion the Notaire's fees and registration duty are payable. Duty rates vary according to type of property but generally for residential property about 6.5-8.0% should be allowed for costs. Once published, the deeds are retained permanently by the Notaire, with an official copy, called an "expedition" being provided to the purchaser.

Thought must be given to French Inheritance law. Where property in France is owned by an individual, that individual's children have automatic rights of inheritance, regardless of age. Four children, for example, will inherit three quarters of their parent's property between them. This can give rise to substantial problems, but with planning, these can be avoided. Often the best solution is that which the French themselves use the Société Civile Immobilière. This fiscally transparent quasi-partnership offers flexibility and tax planning opportunities. Other approaches exist, depending on what the buyer is trying to achieve.

INHERITANCE TAX:

This is payable by each beneficiary separately. The rate depends on the relationship between the beneficiary and the deceased and the value received. Non relatives pay a flat rate of 60%. Children and a widow/er will not pay more than 20% unless their share exceeds 520,000 Euros.

CAPITAL GAINS TAX:

New rules as from 1 January 2004:
Add cost of improvements to the total acquisition price (inl.costs)-if sold more than 5 years after purchase. The capital gain is calculated on the difference between this figure and the sale price, as follows:
Deduct 10% for every year the property is held beyond the fifth, deduct 1,000 Euros, the resultant figure is the net gain which is charged at 16% for EU residents and 33.33% for non EU residents. A tax guarantor must be appointed.

WEALTH TAX:

This applies once French assets exceed 720,000 Euros and is an annual tax. The top rate is 0.55-1.8%.

3% ANNUAL TAX:

This applies to companies which own property in France, subject to numerous exemptions.

LIMITED COMPANIES:

These are subject to unfavourable tax treatment on resale due to the rules on depreciation for corporation tax purposes.

INCOME TAX:

This is payable on French letting income, wherever received, at a minimum of 25%.

(Art 164C of the CGI) is payable by individuals resident in countries without a double tax treaty with France. All these taxes are subject to the domicile and residence of the person concerned and the application of the relevant double tax treaties.

NB:

The above is for guide line purposes only, detail and figures are subject to change. This should not be relied upon in any way. Professional legal advice is recommended.