What is the new French property wealth tax (IFI)?
IFI? What is it?
Since January 1st 2018, the Solidarity Wealth Tax (ISF) has been abolished and a new tax, the Property Wealth Tax (IFI), has been created. The IFI concerns persons holding a net property portfolio of more than €1.3m.
Who has to pay?
In 2018, 132,722 taxpayers had to pay the IFI tax against 358,000 for the last year the ISF was in use. 46% of the revenue from the IFI tax come from the top 10% of taxpayers. In other words, 10% of the IFI taxpayers provide 46% of the revenue. On the other hand, taxpayers whose wealth is less than €1.6m represent only 7% of the revenue. This divide makes sense given that this tax is aimed at the wealthiest people in France.
A more fair tax?
We also discovered that people who are paying IFI have a higher income than those who paid the former ISF. Those who earn €234,000 or more a year will need to pay IFI which is significantly lower than the ISF which had to be paid by those earning €165,000 or more a year. This shows that bigger investors are targeted by this new tax.
The IFI does seem to be fulfilling its assigned role by limiting tax cuts for SMEs and reducing the impact of donations on tax cuts while bringing significant capital to the state. However, could this tax encourage the wealthiest of France to flee?