French to tax foreign second-home owners

UK citizens who own homes in France may have to pay substantially more in tax in that country, under proposals announced by ministers.

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UK citizens who own homes in France may have to pay substantially more in tax in that country, under proposals announced on Wednesday, reports the BBC.

Capital gains tax, and income tax on rental income, will rise substantially for foreigners, to levels paid by French citizens.

Several hundred thousand UK citizens own, and let, homes in France.

French President Francois Hollande intends to raise taxes on businesses and the richest households.

He is targeting them for extra taxation worth 7.2bn euros (£5.8bn; $9bn).

He also unveiled plans for a 2.3bn-euro one-off levy on households earning 1.3m euros a year or more.

At the moment, French capital gains tax is levied on the sale of a home at 19%, plus 15.5% as a "social charge" to pay for state benefits.

Likewise, tax on rental income is levied at 20% plus 15.5% social charge.

The social charges are not currently paid by foreigners who own homes in France, but under President Hollande's plans, they will be.

"I am surprised that they are applying social charges to non-residents - you cannot be taxed for something you do not receive," said Patrick Delas, a French lawyer at London law firm Russell-Cooke.

Read more of this report from the BBC.

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