Specific rules and regulations defining the requirement to appoint a Fiscal Representative when selling a French property are governed by CGI, article 244 bis A

In summary, the sale by a non-resident individual of a real estate property located in France requires the appointment of a tax representative, except under the scenarios for dispensation set out below.

Three scenarios allow for automatic dispensation from appointing a tax representative:

• When the seller lives, is based or is incorporated in an EU Member State or in another country party to the Agreement on the European Economic Area (EEA) which has signed a mutual administrative assistance agreement with France (Iceland and Norway)

• For sales of €150,000 or less. This upper limit is assessed for each seller.

• For sales allowing for capital gains exemption both in terms of income tax and social levies owing to the duration of ownership of the property (22 years for income tax and 30 years for social levies)

With effect from 1st January 2021 and due to BREXIT, owners of French properties residing in the UK will no longer be exempt. As such, all UK residents are now required to appoint a Fiscal Representative when selling a French property. The requirement to appoint a Fiscal Representative applies regardless of whether Capital Gains have occurred.

 

Who can act as a Fiscal Representative ?

The following entities and individuals are authorised to act as tax representatives:
• A company or organisation already permanently accredited by the tax authorities
• Banks and credit institutions carrying on their business activity in France
• The buyer of the property if he is resident of France for tax purposes
• Or any other person who is resident of France for tax purposes, except notaries and lawyers. In the latter category, the representative must be accredited by the tax authorities.

 

Who and when to appoint a Fiscal Representative ? 

Accredited private companies authorised to act as Fiscal representatives are frequently appointed by the French notary at the time the sale takes place. It is not uncommon for the seller not to be consulted as French notaries often request the assistance of a Fiscal Representative company they are used to working with, without any necessarily operating a tender process.

 

What is the role of a Fiscal Representative ?

In essence, the role of a fiscal representative is to calculate the gain or the loss in value related to the sale of the property. The Tax agent is in charge of all the fiscal procedures including establishing and signing the forms required by the French tax administration.

A fiscal representative effectively guarantees the accuracy of the Capital Gains calculation and acts as a guarantor should the calculation be incorrect and if penalties are applied.

Because of Fiscal representatives are liable for any incorrect tax assessment, private companies tend to have a conservative approach when calculating Capital Gains Tax. This typically comes in the form of expenses or renovation costs not being recognised as items deductible in the CGT calculation.

 

What is the cost of a Fiscal Representative ?

Private companies accredited by the tax authorities will charge a fee ranging between 0.3% and 1% of the selling price of the property.

Individuals authorised by the French tax administration to act as Tax Representatives for a specific transaction can proceed free of charge.

 

Our advice is quite simply that sellers should consider the appointment of a Fiscal Representative and the calculation of Capital Gains Tax very carefully. As much as 1% of the sale price as well as actual Capital Gain Tax liabilities are at stake.

It is our recommendation that the following steps should be followed :

• • Determine whether any tax exemptions apply to you
  • Assess deductible expenses, reliefs and default fees to calculate your Capital Gains tax liability
  • Search the market and compare options before appointing a Fiscal Representative

 

Please get in touch if you require further information or require assistance with this process.