France: new measure regarding Wealth tax
End of the deductibility of shareholders’ loans to an intermediary company financing real estate in France.
On July 31st 2011, the French 2011 Amended Finance Bill has been definitively adopted in France.
Among the main measures adopted by the French government, attention is drawn to a new wealth tax rules concerning non-residents investing in French real estate via Special Purpose Vehicles (“SPV”).
As from January 1st 2012, the valuation for wealth tax purposes of the shares of an SPV owning real estate in France can not be reduced by any kind of liability, which is directly or indirectly owned by its shareholder. Previously, such liabilities were considered as financial investments into France and were consequently wealth tax exempted.
As it is currently worded, this new measure seems to apply solely to shareholders loans and while it is yet to be determined whether it will also apply to loans granted by other affiliated entities, it will most probably not apply to loans granted by third parties.
Most existing real estate structures will need to be reviewed. Our team is already working on alternative solutions.
FOR FURTHER INFORMATION PLEASE DON’T HESITATE TO CONTACT US:
Betty Prudhomme
Senior Vice President Tax
betty.prudhomme@sgg.lu
Pierre-Siffrein Guillet
Senior Advisor
pierre.siffrein.guillet@sgg.lu
