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French tax grab could breach EU law
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France' s decision to slap steep, r etrospectiv e t axes on British holiday hom eowners in
the count r y could b r each EU law, a former Fren ch finance minister has w arned.
L oading
FOLLO\'o/ THE TELEGRAPH OfI SOCIAL MEDIA »
FlEW S MOST V IEWED
I
TODA Y
1.
La Roque-Gageac on the Dordogne river. Ufe in France is about to get more exp-ensive for the British. Photo: ALAMY
By Henry Samuel and James Hal1
10:00PM BST 05 Jul 20 12
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The taxes could also cause house prices to slump in France as Britons
't error plot '
will be reluctant to buy or sell houses, property experts said.
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Around 200,000 British people own second homes in areas such as
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Normandy, Brittany and the Loire Valley.
France's new socialist Governmeni announced on Wednesday that it
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plans to increase tax on rental income from 20 per cent to 35.5 per cent.
and ra1se capital ga1ns tax when people sell properties from 19 per cent
to 34.5 per cent.
However Jean Arthuis, who was fimnce minister under right-wing Prime
poll
EDIT OR' S CHOICE »
Xews
UKXews »
Minister Alain Juppe in the 1990s, ;aid that the increased taxes could be
Property Xews »
Scientology head's niece \·v arns Katie Holmes
unconstitutional under French law and therefore JUdged unfair by the
European Union.
James Hall»
[.
Henry Samuel »
This is because the tax raid would be classified under French rules as a
"social contribution" which absent British homeowners would receive very
little benefit from.
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Meanwhile property experts said tr at the taxes could cause house prices
COURSES
V ISTAPRINT
IT JOBS
to fall in France. This is because people will be reluctant to buy houses
Knowing that they will be hit with hEavy taxes when they come to sell the
properties. The taxes will also deter people from selling houses, causing
the marKet to stagnate.
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Jean-Michel Crassat, secretary general of the Dordogne chamber for the
French real estate agency federatiOn (FNAIM), said: "There is a risK that
L oading
it will drive prices down."
"Sales prices have already hit a 120,000-euro ceiling in the region, and
anyone who bought five years ago is liable to sell for less than their
purchase price right now. But this might accelerate the drop as some
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will be reluctant to buy or sell houses, property experts said.
Around 200,000 British people own second homes in areas such as
Normandy, Brittany and the Loire Valley.
France's new socialist Governmeni announced on Wednesday that it
plans to increase tax on rental income from 20 per cent to 35.5 per cent.
and raise capital gains tax when people sell properties from 19 per cent
c ov~ c:..1 H~uo T r..nt
1
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l:J Twoter 1 25
unconstitutional under French law and therefore JUdged unfair by the
European Un1on.
t error plot'
[E3 Emai1]
[fm unkedln 1
4· The tim.e \Vill never be right for DaYid
Cameron to hold a referendum on the EU
~rews
Minister Alain Juppe in the 1990s. ;aid that the increased taxes could be
1
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could h aYe b een sh ot' say passengers
to 34.5 per cent.
However Jean Arthu1s. who was fimnce m1n1ster under nght-w1ng Pnme
2. \Vhite Muslim one of six arrested over
UKXews »
Property Xews »
James Han »
Henry Samuel »
5 · Cannibal killers delay Papua l\ew Guinea
poll
EDIT OR'S CHOICE »
Scientology head's niece warns Katie Holmes
This is because the tax raid would be classified under French rules as a
"social contribution• which absent British homeowners would receive very
Estranged niece of
head of Church of
IU tlEWS
Scientology warns
little benefit rrom
Kat ie Holmes t hat
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place for child'
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Mr Arthuts said "What creates ambtgu1ty is to call the tax a · social
charge· as when one IS a foreigner one can rightly claim that one
Parent's job loss bas
'significant' impact on
child's exam results,
research finds
Why making finger quote marks isn't cool
&o Dream machine: Ferrari f4o
Hitler protected his Je\\isb commander
Hemingway \\TOte 4 7 endings to masterpiece
doesn't ga1n trom as many social benefits as the French ·
Meanwhile properiy experts said t~at the taxes could cause house prices
to fall in France This is because people w111 be reluctant to buy houses
Knowing that they will be hit w1th heavy taxes when they come to sell the
properties The taxes Will also deter people trom selling houses. causing
the marKet to stagnate
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Jean-Michel crassat. secretary general or the Dordogne chamber tor the
French real estate agency federation (FNAIM). said: "There is a risK that
it will drive prices down "
"Sales prices have already hit a 120.000-euro ceiling in the region. and
anyone wno oougnt 11ve years ago IS 11ao1e to sell tor less man tne1r
purchase price right now But this might accelerate the drop as some
!\ancy Deii'Oiio
people throw in the towel and say 'That's It I'm ott. I don't want to be a
cash cow any longer " he said
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''It could also slow down purchases as people don't want to buy in a
country where you're taxed to the hilt •
"I thinK ~·sa monument idiOCY as It wtlllrkely engender fraud and under
the table practiCes that had all but been stamped out Too much tax kills
tax •
criticises the BBC's
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Patnck Delas a soliCitor at Russei~Cooke SoiiC~ors in London. said: "I
am not sure thiS Wlll a ffect the pro~eriy market ommediately but people
may think twice about se111ng and the market will certainly slow down •
Cathy Dursapt an estate agent 1n Eymet 1n the Dordogne. said she had
fielded an · avalanche' of calls from concerned customers and
acquaintances abOut the tax rises But she remained cautious. saying:
"I'm French and 1 tell them never tc believe a French law until it taKes
ettecr
french election:
Nicolas Sarkozy and
Francois Hollande
cast their...
::~:::~:Apnl ::~:o 12
second-home owners were aghast at the news
Nicola and Oliver Turner both 43. bought a rundown barn in the hamlet
ot Monbazillac. rural Dordogne live years ago tor 100.000 euros. Mr
Turner has painstaKingly restored the properiy himself.
Given all the restoration worK. their holiday home is now on the marKet
tor 300.000 euros meaning they stand to pay up to 69 o oo euros given
the new capital gains tax
SpeaKing from her home In Herttordshlre Mrs Turner said she was
· gutted" about the new hiKe
"As far as the French is concernec It's all profit and we can't ottset our
expenses to bflng the profit down We're not going to be in a good
pos~1on once It'S sold we'll baslcaly come out or ~with nothing •
trom Jan 1 this
year The increase on cap1tal gains tax may apply from this week. and
certaonly by the end of the month meaning properiy owners will have
The nse in tax on rentaloncome wil be retrospectove
little
or no t1me to escape the Increased tax by selling their homes.
Treasury sources saod the department os examining France's proposals.
1t there os any dlscnmlnat1on we wil challenge it " the source said.
Jean-Seba stien Dumont International tax lawyer based in Paris. warned
mat me new measures were liKely ·me tip ot me 1ce oerg· 1n tenms 01 new
tax tor rore1gn home owners
·w e just had a correct1ve tax law but we all Know that the lion's share of
the new measures were not announced yesterday but will be rolled out in
the autumn "
One opposition politician dubbed the measure a "250 million-euro lie" on
the part of President Fran ~ol s Hollande's Socialist government, as it had
specifically pledged not to raise taxes for non-residents in its electoral
programme
Olivier Cadle a UK based centre-Right member of the Council for the
French Abroad said he found the charges "scandalous".
"The Socialists made it clear during their electoral campaign that they
would not impose any specifiC tax for non-residents bar in Sw~er1and and
Luxembourg This Is proof that thef Ired to the tune of 250 million euros
per year • he said
Karen Tart the edotor tor French Properiy News said "lfs not good
news but ~ has to be put in perspectove to a certain degree. If your
French home os your ma1n home ~doesn't attect you at all •
"A lot o f Bnbsh home OWlhers also actually don't rent out their second
homes • oreternno to use them tor vacations or to house travellino
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Naomi Watts filmed
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04 July 20 12
friends She felt that since groups strongly campaigned against a similar.
dropped proposal by Nicolas Sarkozy "there's some hope the same
thing could happen again "