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TAXES

What’s the penalty for failing to file France’s new property tax declaration?

French tax authorities recently issued a new required property tax declaration, here is what you need to know about the potential penalty for failing to file it.

Published: 7 February 2023 09:28 CET
What's the penalty for failing to file France's new property tax declaration?
The word "Impots" (Taxes) is seen on top of euro banknotes in Lille on August 25, 2014. (Photo by PHILIPPE HUGUEN / AFP)

French tax authorities have threatened to issue fines of up to €150 for those property owners fail to fill submit the new compulsory tax return.

Property owners in France have until June 30th, 2023 to file the new return, which specifies whether the property in question is a primary or secondary residence.

How much is the fine?

It is set to a fixed amount of €150 per property according to the French Public Service website.

Under what circumstances could I be fined?

You can be fined if you fail to submit the declaration prior to June 30th. You can also be fined if the declaration is found to be erroneous, incomplete, or missing information.

When could the fine be issued?

The fine would only be issued after June 30th – the final date to file the tax declaration – if tax authorities do not receive the form by the deadline.

How can I fill out my declaration?

If you live in France and already make your annual tax declaration online then this process should be fairly easy – head to impots.gouv.fr, log in and then click on Biens immobiliers (“Real Estate”) in the menu bar along the top of the website.

You will then be directed to the “Manage my real estate” service of the site which will then list the property or properties in your name, and you can fill out the déclaration d’occupation for each, stating whether it is your main residence or a second home.

The Local has put together a guide to the new tax declaration and how to fill it out here.

READ MORE: France brings in new tax declaration for property-owners

If you have any questions or difficulties in completing the declaration, you can contact the help phone number at 0 809 401 401 – keep in mind that the operator may only speak French, so if you are worried about your language level you may want to ask for assistance from a proficient French speaker.

You can also reach out to the tax authorities using the secure messaging system on the Impôts.Gouv.fr website. The page “J’ai une question sur le service Biens immobiliers” (“I have a question about the Real Estate department”) will allow you to send messages and ask questions, albeit in French.

You can also find the location of your local tax office here. 

The new tax declaration applies to anyone who owns property in France – whether it is their main residence or a second home – including those who live in another country. If you do not own property and only rent your home, then this does not concern you.

Keep in mind that the tax return is not an extra tax, it’s simply an extra piece of paperwork that has to be filled in, known as a Déclaration d’occupation, and this declaration is concerned with whether the property is your main residence or a second home.

The document will be required this year because of recent changes to the property tax system. There are two types of property tax in France; taxe foncière which is paid by the property owner and taxe d’habitation which is paid by the property occupier. If you own your home home, traditionally you paid both.

READ MORE: UPDATE: New French property tax declaration – your questions answered

However, taxe d’habitation is in the process of being scrapped for most people, and now only high-earners and second-home owners pay it. The problem is that the tax office don’t have a record of whether a property is used as a main home or a second home and therefore don’t know who to send bills to – hence the new declaration.

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PROPERTY

What should I do if I want to dissolve my French property SCI?

Owning a French property through an SCI brings with it some extra complications, including with the new property tax declaration. We asked the experts whether dissolving the SCI is a good idea, and how you go about doing that.

Published: 9 March 2023 10:13 CET
What should I do if I want to dissolve my French property SCI?

An SCI – société civile immobilière – is a non-trading real estate company made up of at least two people. Essentially, it allows people to own property such as a second home through shares of a company, rather than under their own name.  

There are more than one million properties in France that are registered as SCIs, but most of them were created some years ago. In previous decades, they were quite popular, but SCIs have become less common as time has gone on and several tax loopholes have been closed.

For foreigners who own second-homes in France, the 2015 EU ruling on inheritance means that for many people their rationale for having an SCI – bypassing French inheritance laws – no longer applies.

Additionally SCIs, particularly for foreigners, represent a large administrative burden, and as such can also become a drain on finances when it is necessary to seek legal and financial counsel. 

Some SCI owners have also run into problems with the new French property tax declaration. 

READ MORE: EXPLAINED: The new French property declaration form for SCI owners

“An SCI is a large commitment. It means you will agree to run a company, and that involves paperwork and meetings”, explained Paris-based notaire, Laure Gaschignard.

Gaschignard told The Local that there are two primary situations where people might want to set up an SCI. The first would be for couples who are not married or pacsé (civil partnership), but want to buy property together and set up an inheritance system where the one is able to maintain either a portion of or the entire property in the event of the other’s death.

The other situation Gaschignard noted was for those who have unique family situations and are in need of a more flexible way to structure their property ownership and inheritance. 

For others, there might be some tax-based interests in setting up an SCI depending on their financial portfolio, but many have found that owning property in this manner may not have been as financially lucrative or simple administratively as previously intended.

As a result, some are wondering whether the best solution would be to simply dissolve their SCI and reclaim the property under their own name.

How can you go about switching it back?

While it is possible to dissolve an SCI and get the property back under your own name, it might be more costly to dissolve the SCI rather than to maintain it. 

READ MORE: EXPLAINED: The advantages and pitfalls of buying French property with an SCI

First, there are some scenarios where an SCI should be dissolved – if it has has reached its expiration date (typically, this is set to 99 years) or if there terms were put into contracts that set up a specific lifespan for the SCI, if there is an intent to sell the property, or if partners to the SCI opt to sell their shares to a single partner. An SCI can also be dissolved by court decision, if necessary.

Otherwise, if the partners wish to dissolve the SCI, then they must hold a special meeting to vote on the plan and to appoint a ‘liquidator’. 

Several administrative steps will follow, including publishing a posting in a legal newspaper and filing for dissolution.

It is strongly recommended that people seek professional advice on this.

Is it advisable to do so?

You should be aware that if the SCI has appreciated in value significantly, then you will likely be taxed on liquidation. While it would be possible to recover your assets, depending on the situation, you could lose out on funds in the process. 

You may owe capital gains taxes, depending on which regime you were taxed and whether the SCI is your primary residence.

According to Maître Edouard Pruvost, the best option for those looking to dissolve would be to meet with legal counsel and find out approximately how much you stand to gain or lose in the dissolution process. 

This article is a general overview on the issue of SCIs and does not constitute legal advice. Anyone with an SCI is strongly advised to seek professional advice from a lawyer with expertise in the French legal and tax systems.

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