Answers - Real Estate

When buying a property abroad - whether you will be living there or simply spending holidays or the odd weekend there and renting it out for the rest of time - it is important to know what your tax situation is so that you don't get hit with any unexpected tax bills.

France is no exception. This article will run through the main taxes in France and help explain ho

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

w they work and if they might affect you.

Tax:

If you are domiciled in France, you will be taxed on your entire income whether it be from French or foreign sources. It does not matter what nationality you are - if you spend more than 183 days per year in France you are considered as French domiciled and still taxed on your world wide income.

For those not domici

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

ed in France, you are still liable for any income from French sources; this includes rent from letting out your property and any income derived from working in the country. The authorities in both the country in which you normally reside and France will be interested in your earnings and if it is above a certain threshold you could be liable in both countries unles

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

there is a double tax treaty between the countries - as exists between all EU members and many other countries. However it is very important to notify the authorities if you are making a permanent move to France before the event in order to take advantage of this treaty.

It should also be noted that in France taxes are not deducted using the PAYE system as in the

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

UK; each individual must fill in their own self assessment form whereby taxes are paid the year after in which the income is earned (years run from January 1st to December 31st). To do this, you must first register at the "Centre des Impots" which is the local tax centre.

Income tax:

This ranges from tax levied on "earned income" which is a progressive tax to tax

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

on "unearned income" such as investment income based on interest from bank accounts and property yields. A separate tax is levied solely on gross rental income if you let out your property in France.

France still strongly favours the family unit and there are distinct advantages in terms of reduced tax liability if you are a large family as tax is assessed on a ho

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

sehold basis. If you are married and/or have children in the family, you pay less tax as there are more dependants; this is called the "quotient familial". There are also other allowances such as those for childcare and domestic help all of which go towards making large families in France pay less tax than anywhere else in Europe.

If you are unmarried or united on

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

ly by the PACS agreement (see more about PACS below), then you are likely to pay more tax than married couples - not just with regard to income tax but also inheritance tax.

Property tax:

There are two property taxes in France: taxe fonci?re and taxe d'habitation.

Taxe fonci?re is paid by the property owner regardless of whether you live there or abroad - but th

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

re is an exemption for two years for newly built properties.

Taxe d'habitation on the other hand is paid by whoever occupies the building at the time: hence if it is rented out it is paid by the tenants.

Both taxes are similar to UK council tax and are paid the year following the rental period with special allowances for retired residents and derelict properties.

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

Capital Gains tax:

This tax is paid on the profits of any property which has been sold, including jewellery, securities, shares and real estate. However, fortunately there are no taxes to be paid on the sale of your principal residence but only on sales of additional property. People who rent their main home are exempt if they sell their second home as well as th

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

se who have owned the house for 15 years or more.

If a property is sold within two years, then it is subject to 33.3% capital gains. However, this falls by 5% a year and is multiplied by an index linked multiplier of the eventual sale price of the property until 15 years are up. If there has been some renovation to the property, however, the cost can be offset aga

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

nst the profits as can legal and agency fees.

Inheritance tax:

The system in France is very different to that which you might find in England or anywhere else and it is advisable to talk to a tax advisor BEFORE you buy your property in France to prevent future burdens on your family or partner.

Whether you are a resident or not in France, you will still have to

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

onform to french succession law and your family will still be liable to pay inheritance duty in France upon your death. It is also important to note that French succession law will not allow for you to leave out any of your children in favour of your spouse and will ensure that they get their share.

There are however, a number of different ways to minimise their b

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

rden depending on your situation, for example:

- A very popular and useful way of lessening your relatives' inheritance tax if the tax in France is greater than it would be in your home country is to form an SCI which is a property holding company. The property in question can be divided into shares and these shares can be distributed as you wish with the result t

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

hat any future inheritance tax on the property will be subject to the laws in the country in which you are a resident. It is also a good solution for those in a complex family situation living with people who are not members of their family. Shares can be freely given to a partner or children whereby inheritance tax will be avoided if done at least 10 years prior t

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

death of the owner of the shares.

- For married couples who wish their half of the property to go to the surviving spouse, then the "clause tontine" is a good option. It is like a joint tenancy agreement and essentially suspends the ownership of the property until either spouse dies so that the entire property is owned by the surviving spouse. They will, however,

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

still have to pay inheritance tax on half of the property.

- Another way to ensure that your half of the property in question goes to your spouse is to make a change of the matrimonial regime so that your properties are no longer separated. You must have been married for at least two years and prepared to pay some legal charges but it will mean that the surviving

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

pouse will only pay 1% tax on the property as "registration duty". This system can get complicated if there are children involved from current or past marriages as they still retain certain rights to the property and legal advice should be taken.

- In 1999 a new contract called PACS was also brought in under French law giving certain benefits to same and different

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

sex couples which were not previously available. These inheritance and fiscal rights are not as beneficial as those available to married couples but are certainly an improvement on the previous situation.

Wealth tax:

This is a tax levied on assets that exceed 720,000 Euros and covers a wide range of assets to include your property and bank balances amongst other

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

hings. If you are resident in France but not domiciled there, then you will only be taxed on what you have in France. If domiciled there as well then the tax applies to your entire fortune all over the world.

For other articles on buying French property, see www.leapfrog-properties.com/articles

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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Answers - Buying French Property - How Much Tax Do I Have to Pay?

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