1 rue Louis GASSIN - 06300 NICE +33 (0) 4 93 83 08 76

Legal news

Import VAT: reminder of the new declaration rules

Posted on : April 27, 2022

The VAT applicable to imports must now be declared to the General Management of Public Finance (Direction générale des Finances publiques – DGFiP) on the VAT return, not to the General Management of Customs and Indirect Taxation (Direction Générale des Douanes et Droits Indirects – DGDDI) during customs clearance.

Several information, in order to facilitate your VAT return:

  • the online declaration is pre-filled with the amount of import VAT to be collected (excluding suspensive tax regimes – RFS), based on the elements that you or your registered customs representatives (RDE) have previously declared to the DGDDI.

The pre-filling is effective from the 14th day of each month for operations carried out during the previous month;

  • the details of the pre-filled amount are accessible in the “DONEES ATVAI” tab of your professional account on the douane.gouv.fr website; in addition to the declaration numbers and, for each of them, the taxable base by rate and nomenclature, it also includes information identifying the RDEs (Name and EORI number); and
  • for all import VAT payers, the deadline for filing the VAT return is the 24th of each month.

The pre-filled VAT amounts must be checked by you and corrected if necessary.

To do this, you should ensure that you have the necessary information, especially if you use a registered customs representative (RDE) to validate the import VAT amount.

If there is a discrepancy between the pre-filled amount and the amount you believe you should declare, you will need to correct the pre-filled output VAT amount and you could contact the RDE to keep him informed.

Before validating your VAT return, it is also your responsibility to complete it with the data not pre-filled such as the taxable import VAT bases when you use an RFS, the non-taxable bases and the related input VAT amount.

Clarification of the importer population

The collection of import VAT on the VAT return concerns all taxable persons and non-taxable persons who have a valid intra-European VAT number in France.

We remind you that the intra-European VAT number must now be entered on your customs declarations.

There are several details depending on your situation:

  • If you are placed under the simplified taxation regime (RSI) for VAT and you intend to carry out imports, you will no longer be able to benefit from the RSI and will have to file a VAT return according to the normal taxation regime after having informed your tax department.
  • If you are under a basic VAT exemption scheme, you will have to declare the VAT relating to the imports on the VAT return n° 3310-CA3 for the month in which the VAT became payable.

If you do not have a French intra-European VAT number even though you are importing goods into France, we invite you to contact your Tax office to obtain one.

Cabinet Nicolas BRAHIN

Advokatfirma i NICE, Lawyers in NICE

Email :  contact@brahin-avocats.com

1, Rue Louis Gassin – 06300 NICE (FRANCE)

Tel :   +33 493 830 876      /    Fax : +33 493 181 437

www.brahin-avocats.com

Read more
 

From what age should you pass on your estate?

Posted on : April 22, 2022

Giving part of your assets in your life remains the most effective way to reduce the inheritance tax due by heirs.

With an allowance currently set at 100,000 € between each parent and each child (200,000 € for a couple, per child), which is replenished every 15 years, the sums passed on without paying donation tax climb quickly.

Especially if you add the deduction of 31,8865 € which applies to family donations of money made by a donor under 80 years old to an adult beneficiary, which is also renewed every 15 years.

Today, a 50 years old person who gives 131 865 € (a “classic” donation coupled with a family donation) to a child can renew the operation at 65 years old, then at 80 years old, without paying a single cent to the tax office.

Experts even recommend giving beyond the allowance; up to around 550,000 €. This is especially so the donor can pay the donation tax without it being considered a supplement of taxable donation.

It is better to smooth out the transmission of one’s assets over time in order to purge the allowance every 15 years and reset the tax calculation scale.

As the tax rate is progressive, it allows you to take advantage of the bottom of the scale several times, up to the one taxed at the rather reasonable rate of 20% (capped at 552,324 €, NDLR).

If nothing is anticipated, the same sum transmitted once after the passing will be taxed at a rate of 30, 40, or even 45%, as inheritance tax.

Of course, the age to convey varies according to the size of the estate.

The average person will start to work on it at the age of 60 or 65, after having built up enough assets to transfer part of them.

Nevertheless, to convey during one’s lifetime is a very good fiscal operation, not only to reduce inheritance tax in the long run.

By giving the usufruct of a rental property for 5 to 10 years to a child who will finance his or her studies thanks to the rents he or she will receive, the parents take the property out of their estate subject to the real estate wealth tax (IFI), with a tax saving at the end.

In the same way, it is sometimes more advantageous to give a property than to proceed to its sale.

The reason for this? The act of donation erases the added value tax on real estate capital gains (at a rate of 36.2%, NDLR).

Don’t give away too much too soon

With the 15-year time limit, the number of donations that can be exempted remains limited for large estates.

However, it is better not to give away too much too young, at the risk of impoverishing oneself, getting into difficulty or losing control of one’s assets.

This is particularly the case if you give away the bare ownership of your main residence.

The donor who becomes the usufructuary of his home can no longer sell it without the agreement of his bare-owner children.

The donor is irrevocably stripped of his property. As the popular French saying goes: “To give is to give, to take back is to steal”.

If one should not give away too soon, the opposite is also true.

After the age of 81, you should no longer transfer in dismemberment of ownership, because the value of the usufruct reaches the rate of 20%.

The donation tax culminates at 80% of the value of the property in full ownership.

The cost of the transmission becomes dissuasive, hence the need to anticipate these operations.

Moreover, after a certain age, giving away is no longer of any use to the estate.

Donations made by the deceased to his heirs in the 15 years preceding his death are taken into account in the succession.

The 100,000 € allowance between parent and child being common to inheritance tax, it will already have been used up.

Moreover, when the tax rate is progressive, the bottom of the scale of calculation already used for a gift of less than 15 years will not be reused, or only up to the remaining balance.

The next lowest unused part of it will be applied in ownership.

But, contrary to popular belief, a previous donation is not taxed again.

Only the inherited excess is.

Nicolas BRAHIN

Lawyer of the Bar of Nice

Specialist in banking and financial law

Panthéon-Sorbonne University

Cabinet BRAHIN Avocats

nicolas.brahin@brahin-avocats.com

Read more
 

Income tax: what will change in 2022

Posted on : April 15, 2022

Taxation

A few days before the first round of the presidential election, Bercy launched on Thursday the last tax return campaign of the five-year term – which remains an obligation for all despite the tax at source – and has not hesitated to highlight the new provisions that can help lighten the bill of taxpayers.

This year, it is more specifically the application of the exceptional revaluation of 10% of the kilometer scale that should be closely observed by a number of households.

Those who are suffering from the explosion of fuel prices.

Announced last January by the government to reduce the cost of fuel prices, this measure provides more specifically to enhance in an “exceptional” way – of 10% – the kilometer scale.

This allows households to deduct from their taxable income, each year, expenses related to the use of their vehicle for business travels.

It is determined according to the type of vehicle and the kilometers driven.

However, in order to benefit from this significant boost due to the revaluation, households must opt for the deduction of actual expenses and therefore give up the flat-rate deduction of 10% that automatically applies.

This is difficult as the “actual expenses” option may be considered more complex.

A lot of people have an interest in switching to actual expenses, they need to take advantage of this tool.

This is the case, for example, for a 30-years-old single man whose net taxable income for 2021 is 28,000 € and who travels 50 km every day to get to work.

According to the DGFiP’s calculations, if this person opts for the flat-rate allowance of 10%, he will obtain a deduction of 2,800 € from his taxable income.

If he chooses the deduction of “real expenses”, and thus benefits from the 10% revaluation of the kilometer scale, he will have a reduction of 4,880 €.

To ensure that taxpayers choose the best option, the DGFiP has put online a simulator dedicated to the calculation of kilometer and other professional expenses.

More surprisingly, the tax authorities have even promised to automatically apply the most advantageous option for households that make a mistake…

Remote working fees

Another measure was put forward: the tax credit for households that have installed an electric vehicle charging station in their home.

More specifically, it represents 75% of the amount of expenses incurred last year within the limit of 300 euros per charging system, as specified by the tax authority.

The executive has also decided to renew in 2021 the exemption of professional expenses related to remote working.

This measure had been put in place for the year 2020 during which many employees worked from home because of quarantines and restrictions to fight against the coronavirus.

In detail, this exemption is capped at 2.50 € per day of remote working, 55 € per month and 580 € per year, slightly more than the 550 € provided in 2020.

Finally, the tax authorities are working with the Ministry of Education to improve the rate of use of school grants, which is considered “insufficient”.

Households with children in secondary school will be able to confirm their entitlement at the end of their online tax return, via a simulator.

This year, the deadlines for filling out the online returns are from May 24 to June 8, depending on the department.

Nicolas BRAHIN

Lawyer of the Bar of Nice

Specialist in banking and financial law

Panthéon-Sorbonne University

Cabinet BRAHIN Avocats

nicolas.brahin@brahin-avocats.com

Read more
 

Income tax: what will change in 2022

Posted on : April 15, 2022

Taxation

A few days before the first round of the presidential election, Bercy launched on Thursday the last tax return campaign of the five-year term – which remains an obligation for all despite the tax at source – and has not hesitated to highlight the new provisions that can help lighten the bill of taxpayers.

This year, it is more specifically the application of the exceptional revaluation of 10% of the kilometer scale that should be closely observed by a number of households.

Those who are suffering from the explosion of fuel prices.

Announced last January by the government to reduce the cost of fuel prices, this measure provides more specifically to enhance in an “exceptional” way – of 10% – the kilometer scale.

This allows households to deduct from their taxable income, each year, expenses related to the use of their vehicle for business travels.

It is determined according to the type of vehicle and the kilometers driven.

However, in order to benefit from this significant boost due to the revaluation, households must opt for the deduction of actual expenses and therefore give up the flat-rate deduction of 10% that automatically applies.

This is difficult as the “actual expenses” option may be considered more complex.

A lot of people have an interest in switching to actual expenses, they need to take advantage of this tool.

This is the case, for example, for a 30-years-old single man whose net taxable income for 2021 is 28,000 € and who travels 50 km every day to get to work.

According to the DGFiP’s calculations, if this person opts for the flat-rate allowance of 10%, he will obtain a deduction of 2,800 € from his taxable income.

If he chooses the deduction of “real expenses”, and thus benefits from the 10% revaluation of the kilometer scale, he will have a reduction of 4,880 €.

To ensure that taxpayers choose the best option, the DGFiP has put online a simulator dedicated to the calculation of kilometer and other professional expenses.

More surprisingly, the tax authorities have even promised to automatically apply the most advantageous option for households that make a mistake…

Remote working fees

Another measure was put forward: the tax credit for households that have installed an electric vehicle charging station in their home.

More specifically, it represents 75% of the amount of expenses incurred last year within the limit of 300 euros per charging system, as specified by the tax authority.

The executive has also decided to renew in 2021 the exemption of professional expenses related to remote working.

This measure had been put in place for the year 2020 during which many employees worked from home because of quarantines and restrictions to fight against the coronavirus.

In detail, this exemption is capped at 2.50 € per day of remote working, 55 € per month and 580 € per year, slightly more than the 550 € provided in 2020.

Finally, the tax authorities are working with the Ministry of Education to improve the rate of use of school grants, which is considered “insufficient”.

Households with children in secondary school will be able to confirm their entitlement at the end of their online tax return, via a simulator.

This year, the deadlines for filling out the online returns are from May 24 to June 8, depending on the department.

Read more
 

Tax on real estate wealth

Posted on : August 13, 2021

The estate tax return must be filed by persons whose estate assets exceed 1,300,000 euros as of January 1, 2021, on the same deadline as the general income tax return. In principle, it is filed with the 2042 return. In the specific case where the taxpayer has no income to declare (and therefore does not file a 2042 return), it must be accompanied by the so-called “light” return 2042-IFI-COV-K.

Overview

A brief description of the characteristics of the real estate wealth tax

The Real Estate Wealth Tax (IFI), introduced by Article 31 of Law 2017-1887 of December 30, 2017, replacing the ISF (Solidarity Tax on Wealth/Welfare), is payable by individuals whose real estate assets exceed €1,300,000.

The tax is annual

It is generated on January 1st of each year. It is on this date that it must be determined whether the conditions for the creation of the tax liability, the composition of the assets and valuation of the property, the amount owed, the situation of the tax economy, the residence of taxpayers, which determines the scope of the tax and, if applicable, the place where the return is to be filed.

Taxable Persons

The IFI applies only to individuals. Legal entities of public or private law (companies, associations, etc.) are not taxable.  IFI is only imposed on individuals whose assets include taxable property whose net value after deduction of debts exceeds €1,300,000.

Taxation by tax households

The tax limit is assessed at the taxpayer’s family level, including spouses (married, related PACS, or living in a common-law relationship) and minor children for whom they are legally managing property.

  1. a) For married persons, the tax base consists, in principle, of all real property of both spouses, regardless of their marital regime, as well as minor children with respect to whom they legally administer the property.

However, each spouse is subject to IFI tax separately on his or her taxable assets and on the assets of his or her minor children if he or she legally manages their assets, in two situations:

  • The spouses are separated and not living under the same roof;
  • The spouses are in the process of divorce or legal separation and have permission from a judge to live separately.

In this case, the administration agrees that the assets of minor children whose parents share legal management will be divided equally between the two households.

  1. b) For partners bound by a contract of civil solidarity (Pacs), the tax base consists of all of their real estate assets as well as the assets of minor children for which one of them legally administers the property.
  2. c) For persons living in a common-law marriage, the tax base also consists of all of their real property assets as well as the assets of minor children with respect to which one of them legally administers the property.

It is specified that cohabitation is defined as “a de facto union, characterized by a stable and continuous life together, between two persons of different sexes or of the same sex who live as a couple” (article 515-8 of the Civil Code).

Territoriality

Individuals with permanent residence in France

Regardless of citizenship, a taxpayer whose tax domicile is in France is taxed on all his or her real estate located in or outside France. However, the tax domicile of the spouse and children must be taken into account to determine the scope of the IFI for each of these individuals.

The criteria for tax domicile meet those of Article 4 B of the Internal Revenue Code.

Persons residing outside France

If the taxpayer does not have domicile for tax purposes in France, he is taxed only on his immovable assets and rights located in France and on his shares in companies or entities (established in France or abroad) to the extent of the proportion of their value representing those same immovable assets or rights.

Effect of international treaties

If there is a bilateral tax treaty, tax residency may be assessed according to the rules set forth in the treaty.

The treaty may provide for either a division of taxation according to the category of property involved, or exclusive taxation in one or the other state.

With regard to the problems of allocating the right to tax between States and eliminating the risks of double taxation, three categories of countries should be distinguished:

  1. a) countries with which there is a convention (or provision) explicitly covering wealth taxation (or former ISF or IGF): the rules contained in the conventions apply;
  2. b) countries with which there is a convention containing sufficient provisions to determine the procedure for wealth taxation;
  3. c) other countries: the rules of domestic law apply (with the deduction of tax paid abroad).

As the administration has stated, the treaty applicable to the ISF does not necessarily apply to the IFI. Therefore, it is necessary to consider the provisions of the specific treaty on a case-by-case basis.

 

Nicolas BRAHIN

Lawyer of the Bar of Nice

Specialist in banking and financial law

Panthéon-Sorbonne University

 

Cabinet BRAHIN Avocats

nicolas.brahin@brahin-avocats.com

Read more
 

Investing in real estate in France for foreign investors

Posted on : August 13, 2021

What are the main points worth clarifying for a foreign investor who has decided to buy real estate in France?

 

А. 4 questions to answer when investing in real estate

When buying a property, an investor may be confronted with 4 questions. Dealing effectively with these issues will become increasingly important once the investment amount increases:

 

  • How to find a property?  

 

This is the real estate agent’s competence.

 

 

  • What taxes will apply to investors and how to minimize them (capital gains tax, wealth tax, inheritance and gift tax)? 

 

For foreign clients, these questions may pose many problems as they will have to deal with French law, the law of their country, double taxation agreements, international and European treaties and regulations.

 

In this case, it is worth contacting a tax specialist / tax attorney.

 

 

  • How and through whom should the property be bought? 

 

Is it more correct to buy in one person’s personal name, together with a spouse, share ownership and usufruct, or use a company? In the latter case, what kind of company is it, with what shareholders or associates, what statutes, etc.

 

A competent attorney and notary are needed in this matter.

 

 

  • How to finance the purchase? 

 

Buying a large property with a mortgage can have several advantages for the investor.

 

It is worth asking a financial advisor who will also be able to understand and take into account the very specific legal and tax aspects of international clients.

B. 7 reasons why bank financing may be beneficial to an international investor

 

  1. Because the investor does not have enough equity capital.

 

  1. If the property to be bought is intended to be rented out, the interest and other expenses related to the mortgage are deducted from the rental income, this minimizes the property income subject to tax in France.

 

  1. Because the investor knows how to invest the available funds so that they bring in more than the value of the loan.

 

  1. Because he wants to minimize the wealth tax. For information, the tax rate is gradually increasing from 0.5% to 1.5% of the value of the property located in France. For example, this tax is 15,000 euros for French properties worth 3 million euros, 50,000 euros for properties worth 6 million euros and 100,000 euros for properties worth 10 million euros.

 

  1. When a foreign property owner in France passes away, his heirs will have to pay inheritance tax in France based on the net asset value of the property. For example, for direct heirs the rate will be 20% for assets worth between 16,000 and 552,000 euros, 30% between 552,000 and 902,000 euros, 40% between 902,000 and 1,805,000 euros and 45% over.

 

For investors living in a country where the inheritance tax is zero or lower than in France (and there are many such countries!), the way to avoid/minimize this French inheritance tax is to buy with financing that will still exist at the date of death.

 

  1. When buying real estate in France, the investor living in a country “outside the euro zone” takes on double risk: the risk of change in the price of the property and the risk of change in the value of the euro against his own base currency. Buying with a 100% Euro pooled loan will avoid/limit this second kind of risk.

 

  1. And simply because the investor wants to save as much personal capital as possible in order to invest it in an additional opportunity or to use it in his business activity.

 

Every investor often has several of these goals, which can be accomplished in several ways:

  • through legal solutions, such as the use of a company, taking advantage of the separation of property into usufruct and bare ownership, the choice of a specific taxation option (French tax regime ” furnished accommodation rental”);

 

  • with an appropriate financing strategy: annuity or interest-bearing mortgage, for how much, in what currency, with which securities;

 

  • but more often it is an individual combination of several of these types of solutions.

 

Nicolas BRAHIN

Lawyer of the Bar of Nice

Specialist in banking and financial law

Panthéon-Sorbonne University

 

Cabinet BRAHIN Avocats

nicolas.brahin@brahin-avocats.com

Read more
 
Musée National Eugène Delacroix
Yellowstone Association
Turtle conservancy
Les amis du musée