ETUDES FISCALES INTERNATIONALES

French legislator established an annual tax of 3% on the market value of properties located in France and owned by c French or foreign corporations or entities (trust foundation)

Legal entities which directly or indirectly own one or more real property assets located in France or rights over such assets are liable to an annual tax at the rate of 3% on the market value (as at 1st January of each year) of such real property assets or rights unless they fall outside the scope of this tax or benefit from an exemption. 

Declaration and payment of the 3% tax is due before 16 May each year.

The rules governing the 3% tax have been subject to substantial rewriting by Article 20 of the Amending Finance Act for 2007

The instruction published by the french tax administration provides a general description of the scope of the 3% tax and of the available exemptions from the 3% tax, as applicable as from 1st January 2008, including the legal provisions  and comments resulting from French tax authorities' official comments made in the circular referenced 7 Q-1-08 published in the Official Tax Bulletin n° 81 dated 8 August 2008

The main objective is to fight against international tax avoidance which is to acquire property located in France through legal foreign entities in order to escape the inheritance taxes, the annual French capital tax on individuals residents or not, the taxation of capital gain taxes , registration fees on acquisition while using anonymous money offshore.

Clearly the text is established to punish anonymous investment just as the 2% tax on the bearer and anonymous notes  

Exemptions from the 3% annual tax  

International organisations and sovereign States

Non-real estate entities

Listed entities

Exemptions subject to a condition of residence

- Less than 5% investors

- Pension funds and charities

- Open-ended investment funds

- Exemptions subject to disclosure of information

The French 3% Real Estate Tax (exemptions) cliquer