Last year France signed tax exchange of information agreements with a number of jurisdictions including Jersy, Guernsy the BVI and Cayman Islands. The draft French laws to bring them into effect have been passed by both houses of the French parliament and are now in force and will have effect for the purposes of France’s 3% tax as of 1 January 2011.
Until now offshore trusts and companies based in the above tax havens had to pay a punitive 3% per annum on the gross market value of the properties which meant few such entities invested in France. This is now set to change as provided disclosure is made of the shareholders in such entities, no 3% tax will be levied.
According to French tax specialist David Anderson, “Investors are likely to seek asset classes not open to them in the UK such as ski chalets,vineyards and chateaux. The areas which are usually most attractive to foreign investors are the Cote d’Azur, Alps and Paris.