French property tax changes boost Channel Islands and Manx investment sectors
Investors with assets domiciled in the Channel Islands and Isle of Man are set to benefit from the scrapping of a “prohibitive” French property tax law.
Currently, an annual 3% tax on the market value of French investment properties is levied against investment funds domiciled in Jersey, Guernsey and the Isle of Man.
However, tax agreements negotiated between France and the three islands that remove the charge are shortly to come into force. The French government has shelved the tax in order to boost its property and construction sectors.
Describing the tax as “prohibitive”, David Anderson, solicitor and chartered tax adviser for Sykes Anderson Solicitors, said: “The imminent removal of the annual 3% tax for Jersey, Guernsey and Manx investors will be extremely positive for the French property market, specifically investment property. For the first time ever, a big pool of capital residing offshore will be able to flow into France."
A second amendment to French law is also boosting the attractiveness of the sale and leaseback market, a favourite of the holiday investment property sector, according to overseas property industry figures.
From April 1, French tax resident have been able to offset 25% of the purchase price of sale and leaseback and holiday homes against their personal income tax over nine years.
While the tax break is only available to French tax residents, it is stimulating the market to the benefit of all participants, according to Pierre & Vacances, a developer and manager of holiday resorts.
The company, which is listed on the SBF 120, the French equivalent of the FTSE 100, said it had sold €150m of sale and leaseback tourism residences since April 1.
Nick Leach, head of Pierre & Vacances Property Investments, UK and Ireland, said: “[the introduction of these tax changes] demonstrates how quickly French legislators are to react to market conditions and underlines why France remains a safe and stable place to invest. Leaseback properties are properties built for tourism and French tourism is thriving so there is a clear opportunity here for overseas investors."