Frances triple tax hikes will help Spanish property07/08/2012
Spain is set to go further ahead in the international property destination league and widened the gap with the country’s top of the table chief rival France
International property investors, already returning to put their money in Spain in greater numbers, believe France may have shot itself in the foot after newly elected President Francoise Hollande announced that UK citizens and other foreign property buyers will have to pay “significantly more tax” under new plans to boost the troubled French economy.
If the new taxes are introduced, foreign property owners and new buyers face massive new taxes to pay for social change and France’s economic recovery, via a triple tax whammy:
- 250,000 current owners who sell will have to pay 19% Capital Gains Tax and 15.5% social charge. France total 34.5%. [Spain now 9%.]
- If owners rent out their places, rental income will be taxed at 20% and 15.5% social charge added. France total 35.5%. [Spain 20%, when regionally applied.]
- New buyers will also get hit with VAT at 19.5% on properties that are new or up to 5 years old. France total 19.5%. [Spain 4% on new and 8% on resales.]
- Foreigners who own homes in France are not currently required to pay social charges which go towards state benefits and are paid by French citizens as they are eligible for the hand-outs.
Property pundits are surprised that non-resident holiday home buyers will be paying 15.5% in social charges are they do not receive any benefits. Said French lawyer, Patrick Delas at London law firm, Russell-Cooke: “I am surprised they are applying social charges to non-residents. This means they are being taxed for something they do not receive.”
Earlier this year, an International Wealth Survey for Lloyds Bank found a 12 month 5% increase in wealthy Britons planning to swop living in the rain belt for a place in the sun. Many cited poor weather and high taxation.
The Lloyds Bank survey suggested over 500,000 Brits, each worth at least £250,000 in savings and investments were planning to relocate to Spain, France and other Mediterranean destinations in the next two years “in search of a better, more affordable lifestyle”.
That represented 19% of wealthy UK residents surveyed an increase of 5% from a year ago. Many said they would reconsider if Britain lowered taxes, cut regulatory red tape for businesses and improved healthcare, education and the police.
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