France: Tax Alert: 3% French Real Estate Annual Tax

The purpose of this note is to provide a didactic presentation of the reporting obligations, particularly aimed at the many "small groups" subject to Pillar Two regulations which are still at the beginning of their project and the French subsidiaries of foreign groups subject to this regulation.

This article summarizes the 2025 Finance bill, enhancing the global minimum tax regime with OECD instructions on deferred taxes and "transparent" entities, effective for financial years ending after Dec 31, 2024

News on tax developments affecting the international Financial Services industry.

On 7 November 2024, the European Court of Justice (CJEU) issued a judgment (XX, C-782/22) regarding the levy of dividend withholding tax (DWT) on foreign insurance companies in light of the European free movement of capital.

Foreign entities owning real estate in France could face a 3% annual tax unless they meet specific disclosure requirements. Recent court rulings highlight key conditions for tax exemptions.

In France, losses incurred by a company in a given fiscal year can be carried forward to offset profits in subsequent years, without time limit.

France has introduced the principle of gradually making the use of electronic invoicing compulsory from 2019 (law no. 2019-1479).

The French tax administration tried to increase the scope of French withholding tax by increasing the beneficial ownership requirements in cases where French banks acquire shares temporally from foreign shareholders.

A couple of months ago, the e-invoicing and e-reporting reform was still foreseen to progressively enter into force as from 1 July 2024, with a timetable extending until 1 January 2026.

For FYs opened as from 1 January, 2023, groups have the possibility to set up a captive reinsurance company in France whose purpose is to exclusively reinsure the own risks of the group.

This article examines the Paris Administrative Court of Appeal's ruling on corporate income tax and residency, reshaping how tax treaties are interpreted.

On 22 December 2022, France and Switzerland reached an agreement on the taxation of home office income.

During the past 18 months, the French Supreme Administrative Court (Conseil d’Etat) has rendered several decisions requalifying capital gains realised by managers of companies

The VAT regime applicable to distance sales has been amended as of 1 July 2021.

In its decision, the French supreme tax court (Conseil d’Etat) had to decide whether, in the presence of intermediary companies, the treaty with the state of residence of the beneficial owner should be applied

Under the parent-subsidiary regime, dividends received by a parent company are exempt from corporate income tax (CIT)

In principle, every employee recruited from abroad to take up a position in France is affiliat­ed to the compulsory French social security schemes for basic and supplementary retirement pension insurance.

Recent case law regarding intercompany cash pool interest rates in a decision involving the SAP Group. 

Over the past few years, responsibility for taxes has been in the process of being transferred from French customs to the French tax authorities

The notions of “main entrepreneur” and “routine entity” are often used, as it is the routine entity’s margin which will be set, with the entrepreneur receiving the residual profit/loss.

Article 21 of the French 2022 Finance Act retroactively adjusts certain tax rules to re-establish the tax neutrality which, until the legal modification introduced by the PACTE Law of 22 May 2019, had benefitted shareholders and unitholders in demergers of UCIs aimed at segregating their illiquid assets.

France has recently announced that it will join other Member States that have gone ahead of EU regulations and imposed electronic invoicing.

The draft of French Budget Bill for 2022 proposes to facilitate the election for VAT taxation of banking and financial in order to make French Funds Managers more competitive as from 1 January 2022.

European counterparts distinguish the French customs authorities by the diversity of their tasks and missions, as well as by the fragmentation of their organisation. To improve the efficiency and productivity of its administrations, the French government has decided to reorganise the missions of tax, customs and fraud administrations.

The French Tax Administration has grown bolder and has deployed new, ambitious approaches both proposing a different Transfer Pricing method and providing an economic analysis to support the profit allocation.

France announced an ambitious reform that was to enter into force from 1 January 2023 but a couple of days ago it was postponed until July 2024.

Today, the EU reform of the rules on cross-bor-der distance selling is undoubtedly moving in the same direction with the introduction of the one-stop shop. Against this trend, it is worth noting the reform regarding the payment of import VAT in France as from January 2022.

The French Supreme Court has just refined its definition of permanent establishment in France for VAT and corporate income tax (CIT) purposes (CE, 11 December 2020, No. 420174, Min. c/ Société Conversant International Ltd).

In France, after half a century, the status quo of the tax regime regarding intangible assets is changed. Our French colleagues outline some of the principles behind the newly established “Nexus” approach.

In accordance with European regulations, the scope of the e-invoicing obligation will be extended to all domestic transactions between companies starting 1 January 2023. The 2020 French Finance Bill (Article 153) sets four objectives for the introduction of this obligation.

The French tax authorities published their comments on the effects of the United Kingdom’s withdrawal from the European Union on the tax benefits granted to individuals and legal entities in respect of investments made in the EU or the European Economic Area.

On 21 February 2021, the French tax authorities (FTA) published their related comments, providing useful interpretive guidance on the French Treaty as well as other treaties based on the MLI model.

France is implementing VAT group regulations for the near future.

In this article, our colleagues from FIDAL explain which requirements must be met by EU and non-EU/EEA investment funds in order to benefit from the exemption from French withholding tax.

The French Supreme VAT Court provides taxpayers with an extended timeframe for the reporting of input VAT.

There is a consultation agreement between France and Germany which should mitigate the tax consequences of home-working days caused by the pandemic.

In France, to deduct the full amount of intergroup interests, a French company must prove that the paid interests are not excessive. Our French colleagues outline some of the principles behind this regulation.

Major changes postponed to 1 July 2021

Fidal’s International Mobility experts give advise on the major challenges businesses are facing in the context of the current crisis.