What Tax Reforms can we Expect Under President Macron?
by Bradley Warden, Blevins Franks
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Taxes on Investments
ive years ago, when François Hollande was elected President, we knew tax rises were imminent. This time around we are hoping for tax cuts. During his electoral campaign, Emmanuel Macron promised significant tax reductions for both individuals and businesses.
Investment income – dividends, interest, capital gains on the sale of securities – are currently taxed at the progressive rates of income tax (another Hollande reform). Rates can be as high as 45%, plus another 4% for income over €500,000, plus social charges of 15.5%.
Wealth Tax only on Property
Taxe d’habitation
Impôt de solidarité sur la fortune (ISF) is an unpopular tax in France, causing many higher net worth individuals to leave the country. M. Macron is keen to stop taxing forms of wealth that contribute to the French economy, and has proposed a drastic reform of wealth tax. He wants to turn it into a tax on high value property, so that other assets, in particular savings and investments, are exempt. Currently, you are liable to wealth tax if you are resident in France on 1st January and your household taxable wealth amounts to over €1,300,000. It is based on worldwide assets, from property and investments to jewellery and cars. The first €800,000 is exempt from this tax, with rates then rising from 0.5% to 1.5%. Nonresidents are liable on assets they own in France. The tax raises around €5 billion a year for government coffers. If the reform goes ahead, it will probably start from 2018, so wealth tax will be due for 2017 as usual.
Macron has suggested he wants to reduce taxation on investment income, to bring it closer to the European average. M. Macron has promised to raise the income thresholds for taxe d’habitation, similar to council tax, so that 80% of the population will be exempt. Currently 30% of households are exempt, for example because they receive little income or they are over 60 and their income is below a certain level. M. Macron is expected to raise the income thresholds over the three years from 2018 to 2020, so that then only 20% of households will be subject to the tax. It will cost the government around €10 billion a year. It is important to keep up to date on tax reforms in France, and review your tax planning to see if you need to make changes or if there any new opportunities you can take advantage of. Take specialist, personalised advice. Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual is advised to seek personalised advice.
‘‘With all the uncertainty at the moment, what facts can I rely on to protect my wealth?” Talk to the people who know.
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With Brexit, the UK elections and a new government in France, these are times of significant change. There are still two years before Brexit though, so it may be advisable to act now, under known rules, rather than wait and see what happens. For peace of mind contact Blevins Franks to review your wealth management. We look at your tax and estate planning, pensions and investment strategies to ensure you are in the best position going forward.
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Blevins Franks Group is represented in France by the following companies: Blevins Franks Financial Management Limited (BFFM) and Blevins Franks France SASU (BFF). BFFM is authorised and regulated by the Financial Conduct Authority in the UK, reference number 179731. Where advice is provided overseas, via the Insurance Mediation Directive from Malta, the regulatory system differs in some respects from that of the UK. Blevins Franks France SASU (BFF), is registered with ORIAS, register number 07 027 475, and authorised as “Conseil en Investissement Financiers” and “Courtiers d’Assurance” Category B (register can be consulted on www.orias.fr). BFF’s registered office: Parc Innolin, 3 Rue du Golf, CS 60073, 33701 Mérignac – RCS BX 498 800 465.
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The Deux-Sèvres Monthly, July 2017 | 45