French Tax Alert

3% tax returns – online filing as of next year

Under French tax legislation, companies and other entities (notably such as trusts and private foundations) which own French real estate, directly or indirectly, are subject to an annual 3% tax applied on the market value of the real estate. This also applies to Monegasques companies owning French properties, in particular civil companies (called SCIs and SCPs).

Companies or entities which disclose their beneficial owner(s) are generally exempt from the payment of this tax provided that they comply with certain filing requirements. In order to benefit from the exemption, the company or entity must either (1) file an annual 3% Tax Form (no 2746) disclosing certain information regarding the property, the shareholders, partners or other members, or (2) give an undertaking to provide this information on the French tax authorities’ request.

The simplest way to benefit from the exemption is to give an undertaking, thus avoiding the obligation to file a 3% tax return every year by 15th May.

 

The filing requirements are going to change as of next year

The French tax authorities are currently sending out letters to foreign companies owning French real estate to inform them that as of next year, the 3% tax returns will need to be filed online.  In order to be able to file online, foreign companies must apply now for an identification number (called SIREN). The procedure to obtain this number is explained in their letter.

This creates additional formalities for those companies, which could otherwise be avoided.

It should be noted that these formalities do not apply to companies who have already given an undertaking to provide information. No action needs to be taken by those companies as they do not have the obligation to file the 3% tax returns.

In respect of companies who have the obligation to file 3% tax returns, they still have time to avoid the formalities and online filing next year if they opt to give an undertaking before the end of the year.

We can advise and assist with these formalities. For any questions on this matter please do not hesitate to contact Frederic Mege on +377 9797 0064 or email him at fmege@mri.mc

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