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Study Backs French Real Estate Tax Review

by Ulrika Lomas, Tax-News.com, Brussels

25 March 2014


There are significant disparities between the level of resident tax paid by households in different areas of France, according to a study from French housing association CGL, which has called for reform.

Tenants or owners of residential premises in France are liable to pay residence tax (taxe d'habitation), based on the notional rental value of a property. The communes or public establishments for intercommunal cooperation are responsible for fixing the rate of the tax each year.

CGL's latest study shows that average residence tax rates were three times higher in some French départements than in others in 2012. The highest recorded average tariffs were in Guadeloupe (21.17 percent), Reunion (20.82 percent), and High Corsica (20.37 percent), while the lowest tariffs were noted in the départements of Haute-Saône (7.7 percent), Lozère (8.3 percent), Lot (8.8 percent), and Loire (9.3 percent). Residence tax averaged 13.38 percent in the French capital.

Tariff variations widened further within the regions themselves, with rates fluctuating between 8 and 61 percent in High Corsica, and between 0.01 percent and 1.5 percent in Fos-sur-Mer.

The French Government has already announced plans to reform the tax. It aims to revise the rental values of residential properties, as they date from 1970 and no longer reflect the reality of the rental market, or the variations across the regions. It may also revise the method used for calculating the tax, with growing support for the levy to be differentiated according to household income. While an overhaul may restore transparency and fairness to the system, the measures are likely to push many tax bills even higher.

TAGS: individuals | tax | tariffs | Guadeloupe | tax rates | France | tax reform | Reunion

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