Foreign investment: the fiscal rules to comply with

Foreign investment: the fiscal rules to comply with

If you have moved and live abroad, you can invest in real estate in France, in your country of residence or elsewhere. It’s a good way to build up or diversify your wealth. However, this does not mean that you will not comply with the tax rules applicable in France. This is why it is important to get information in order to know the applicable laws. This way, you will know if your real estate investment is subject to French tax or to the tax of the country where your property is located. This will prevent you from being considered a tax evader and suffering a tax adjustment. Similarly, in addition to taxes, other taxes may also apply, such as registration fees, inheritance taxes or notary costs.

Different taxes depending on the situation

In France, income tax is linked to the taxable household. However, specific rules exist for French nationals residing abroad for tax purposes. Therefore, to know which rules apply to your case, you must determine your tax residence. If you live in another country, you must comply with the agreements established between the latter and France. If there are no such laws, you are governed by the domestic law of your country of residence. Currently, the French government considers you to be a tax resident if you meet one of these 3 criteria:

  • If your home or main residence remains in France;
  • If your main activity is carried out in France;
  • If the centre of your economic interests is in France.

Therefore, if you are a French tax resident, you must declare all your income in France, even if it comes from abroad. In the event of double taxation, you must refer to international conventions. If there are no such laws, French law will be applicable.

On the other hand, if you are a non-resident, it is necessary to declare taxable income of French origin. If you do not have one, you are not subject to any obligation to declare your income in France.

In summary, if you leave French territory and move abroad, remember to inform your public finance centre to update your situation… and avoid an adjustment…

Tax obligations in the country where the property is located

Nowadays, international treaties often eliminate double taxation by stipulating that income or gains from real estate are taxable only in the country where they are received. Consequently, there will still be tax rules to be respected and therefore, taxes to be paid. In fact, it depends on the nations and laws in force, which may be more or less flexible, more or less attractive to non-residents. As many considerations are possible, depending on the geographical location of the property or investment, it would be difficult to list each case. Nevertheless, we remind you that it is essential to consult the competent bodies to determine the exact tax applicable. Similarly, effective tax management must take into account various legal aspects and issues (e.g. inheritance tax). So, before investing from abroad, get expert advice. At Diamond Estates, our team will assist you and advise you on your investments in Mauritius. If you would like to know more about Mauritian laws and taxation, do not hesitate to contact us !