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Tax Policy Management
Tax Policy Management
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Growth Management
Growth Management
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Tax audit and litigation
Tax audit and litigation
![France’s Finance Act for 2024: significant corporate tax measures](/globalassets/1.-member-firms/france/gtsa/img/202303_illustration_fiscalite-des-entreprises.jpg)
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Definition of a strategic and secure transfer pricing structure
Definition of a strategic and secure transfer pricing structure
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Assistance in the development of international activities and operational reorganisations – “Business restructuring”
Assistance in the development of international activities and operational reorganisations – “Business restructuring”
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Defense of practices and assistance in the context of tax audits and their follow-up from a litigation viewpoint
Defense of practices and assistance in the context of tax audits and their follow-up from a litigation viewpoint
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Annual declaration and documentation obligations
Annual declaration and documentation obligations
![The criminalization of transfer pricing](/globalassets/1.-member-firms/france/gtsa/img/202303_illustration_prix-de-transfert.jpg)
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Domestic and international VAT applicable to your company's flow
Domestic and international VAT applicable to your company's flow
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Banking and financial VAT, VAT in the insurance sector
Banking and financial VAT, VAT in the insurance sector
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VAT related to real estate registration fees
VAT related to real estate registration fees
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VAT in the public and non-profit / association sector
VAT in the public and non-profit / association sector
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Tax audit, tax litigation and relations with the Tax authorities
Tax audit, tax litigation and relations with the Tax authorities
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Applicable rules for invoicing
Applicable rules for invoicing
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Customs issues related to your company's international flows
Customs issues related to your company's international flows
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French VAT registration and compliance obligations
French VAT registration and compliance obligations
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Payroll tax
Payroll tax
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Other indirect taxation
Other indirect taxation
![Non-EU Companies at Paris 2024 Olympics: Get your VAT back!](/globalassets/1.-member-firms/france/gtsa/insight/alerte-fiscale/2024/2024-02-21_paris-2024_promo.jpg)
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Company transfer diagnosis
Company transfer diagnosis
![France’s Finance Act 2024: latest news on individual taxation](/globalassets/1.-member-firms/france/gtsa/img/202303_illustration_fiscalite-patrimoniale.jpg)
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Distribution strategy : Implementing and structuring
Distribution strategy : Implementing and structuring
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Distribution activities digitalisation
Distribution activities digitalisation
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Relations between suppliers and distributors
Relations between suppliers and distributors
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Contractual policy : etablishing and structuring
Contractual policy : etablishing and structuring
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Controls and litigation regarding payment terms
Controls and litigation regarding payment terms
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Organising and securing commercial relations with consumers
Organising and securing commercial relations with consumers
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Data protection - GDPR
Data protection - GDPR
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Commercial Leases
Support in the management and contract management of commercial leases.
![The directive aiming at empowering consumers for the green transition](/globalassets/1.-member-firms/france/gtsa/img/202303_illustration_droit-economique.jpg)
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Traditional Services offered
Traditional Services offered
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Health at work and quality of life at work
Health at work and quality of life at work
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HR Management Audit
HR Management Audit
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HR Engineering and People Change
Implementing managerial solutions in line with the company's strategic challenges
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Management of HR compliance and internal investigations (harassment, discrimination, and whistleblowing)
Management of HR compliance and internal investigations (harassment, discrimination, and whistleblowing)
![The acquisition of paid holiday entitlement during sick leave now provided for by French law](/globalassets/1.-member-firms/france/gtsa/img/202303_illustration_droit-social-ingenerie-rh.jpg)
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Advice on legal structuring
Advice on legal structuring
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Day to day company management
Day to day company management
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Companies reorganisation
Companies reorganisation
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Mergers & Acquisitions - Private Equity
Mergers & Acquisitions - Private Equity
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Changes in shareholder structure - Securities issue
Changes in shareholder structure - Securities issue
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Governance and legal risks management
Governance and legal risks management
![Actionnariat salarié & Management package](/globalassets/1.-member-firms/france/gtsa/insight/2024/2024-01-09_actionnariat-salarie-management-package_promo.jpg)
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Development of an international mobility policy
Development of an international mobility policy
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Coordination of reporting obligations for employees in a mobility situation
Coordination of reporting obligations for employees in a mobility situation
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Advice on social security
Advice on social security
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Assistance in labour law
Assistance in labour law
![Impatriation bonus and spreading of income received by sportsmen and sports women](/globalassets/1.-member-firms/france/gtsa/img/202303_illustration_mobilite.jpg)
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Management and protection of your portfolio of property rights
We put the most appropriate protection policy in place for our clients’ intellectual property rights.
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Securing your projects: advisory and drafting of agreement services
We advise you on the feasibility of your project and the securing of your intellectual property and IT rights.
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Enforcement of your rights: pre-litigation and litigation
Enforcement of your rights: detection of infringement, pre-litigation and litigation
![Beware of communications surrounding the Paris games](/globalassets/1.-member-firms/france/gtsa/img/202303_illustration_propriete-intellectuelle-nouvelles-technologies.jpg)
The importance of providing accurate information in order to qualify for exemption from this tax has once again been highlighted by a Supreme Court decision.
Applicable rules
All French and foreign entities that directly or indirectly (regardless of the number of intermediate entities) own French real estate properties or rights, are subject to an annual tax of 3% of the fair market value of these French assets.
Among the many exemptions from this tax, one of the most widely used is the filing of an annual form disclosing the identity of the owners of the rights in the entity.
The purpose of this tax is to enable the tax authorities to identify the ultimate owners and to prevent them from evading taxes such as the wealth tax or inheritance tax that can be due on these real estate assets.
Moreover, the tax authorities have a 3-year period from the year of filing in which they can audit the return. The limitation period is extended to 6 years if the tax liability is insufficiently disclosed in the return (i.e., when the authorities have to carry out further investigations in order to verify the validity of the exemption).
Facts judged by the court
A Luxembourg-based company acquired a French villa.
The principal shareholder is a company located in the British Virgin Islands. It is owned by an individual who is a resident of Israel for tax purposes.
The Luxembourg company filed 3% real estate returns stating that the shares were held by the Israeli individual.
The tax authorities sent a reassessment proposal to the Luxembourg company requesting the payment of the tax for the previous 6 years.
The Luxembourg company argued that the limitation period was 3 years because the tax returns contained all the necessary information to enable the authorities to verify the validity of the exemption.
Decision
The Court ruled that the 3-year limitation period was indeed not enforceable on the tax authorities as the filed information on the return mentioned the beneficial owner (the Israeli resident) instead of the actual shareholder named in both the articles of association and in official documents issued by the state in which the legal entity was incorporated (i.e. the BVI company). This discrepancy of information was considered sufficient grounds to over-rule the 3-year limitation period.
The Court thereby confirmed that the 3% real estate tax was indeed due for the previous 6 years.
Consequence
This decision together with others, confirm once again that tax returns must be carefully and correctly filed with the French tax authorities.
Irrespective of whether the tax returns are filed in time, the tax authorities can still demand payment of this tax for the last 6 years if the information provided in the returns is incorrect or incomplete.
A recent ministerial reply (Masson, n° 4005, 7th March, 2023) confirms the strictness of this position: the tax is due even if it is readily amended by the taxpayer after the deadline (the sole advantage is the application of reduced interest for late payment).
Both the tax authorities and judges adopt a strict approach in the application of this exemption and do not accept excuses easily.
Taxpayers must ensure that:
- Annual returns are filed for each entity holding French properties directly or indirectly
- The information included in their returns is accurate
- They can provide supporting evidence to the information provided in the case where an audit is performed.
Our team is on hand to help you review your obligations relating to 3% real estate returns and can ensure that your declaration forms are filed correctly and completely.