29 Finance Monthly Taxation Awards 2024. FRANCE spontaneously through a simplified procedure. This service also takes into account the rates of applicable surcharges and interest on arrears, adjusting them to align with the approach adopted by the company. In the context of international tax matters, issues such as undeclared activity in France constituting a permanent establishment, deduction of all or part of a loan granted by a foreign company in breach of the provisions of Article 212 of the French Tax Code, and illegal or abusive arrangements further contribute to the intricacies of advising on tax issues in cross-border M&A transactions. Successfully navigating these complexities requires a deep understanding of the legal and regulatory frameworks in multiple jurisdictions, as well as a proactive approach to compliance and risk management. In international real estate investment, what key tax considerations should investors be aware of, particularly in the French market? Until 2023, the sole stable reference for foreign investors in French real estate was the regular increase of prices. The real estate market is slowing down and the situation is not expected to improve in 2024. This is due to a difficult economic period marked by inflation, which results in a drop in the purchasing power of the French residents, and an increase in bank interest rates, making access to credit more difficult. Sales are therefore down at the end of 2023 and the trend is likely to continue. In their report for the year, the Notaries of France actually observed a decrease in the number of sales in 2023. While 1.13 million sales were made between September 2021 and September 2022, only 928,000 were recorded over the same period. , the next year. “The decline in the number of transactions has accelerated since 2023, reaching 908,000 sales in France (-20% over one year) over 12 rolling months to the end of October 2023”, also notes the FNAIM-Clameur real estate barometer for December 2023. At the same time, a drop in prices was observed at the end of the year, a first since 2015. The Notaries of France thus noted a drop throughout France, and more markedly, in Paris’ area. The price index for old apartments in mainland France fell by 2% over one year and that of old houses, by 1.6%. In Ile-de-France, the index fell by 5.3% for apartments and 5.4% for houses. For apartments and houses, this trend is likely to continue in 2024. While credit rates should also stabilize after having been very high in recent months, counting on a rate of around 4.3% in the first quarter of 2024, the various players are not optimistic about a market recovery over the coming year. From a French tax standpoint, foreign private investors are clearly considered as an important variable adjustment of the French Budget with severe regimes and without any effort of attractiveness. Before purchasing a French real estate property, it is key to determine the structure that will be used to hold it. The choice between purchasing the property through a company (either a non-French company, or a French real estate company) or in one’s own name will depend on several factors, the most important being the following: • The use of the property (i.e., whether it will be partly rented out furnished). In case it is anticipated that the property would be partly rented out furnished, holding the property through a French civil company would trigger adverse tax consequences (and notably, the application of French corporate income tax on a notional annual income supposedly equal to the fair market “Empathy and strong communication skills play a pivotal role, particularly in criminal tax cases, where the client’s fears and concerns are at the forefront.”
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