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Statement of practice of 7th August 2008 related to the "3% tax" reform Article 20 of the French Revised Finance Bill for 2007 (Law n° 2007-1824 of 25 December 2007) has reformed the annual tax on the market value of the properties (or rights on properties) located in France held by certain entities (so-called "3% tax"). The Statement of practice of 7th August 2008 (BOI 7 Q-1-08) comments on the new legislative and regulatory package that came into effect on 1st January 2008. The 3% tax now applies to all entities holding, directly or through an intermediate entity, properties, or rights on properties, located in France, be they legal entities or not (joint-stock companies, partnerships, trusts, investment funds…). Likewise, the exemptions provided by Article 990E of the French Tax Code have been extended and the new package provides for lighter declarative obligations for certain entities. Certain existing exemptions have been adjusted (e.g. extension of the listed companies' exemption to their 100% subsidiaries). Moreover, new exemptions apply to entities realizing portfolio investments (SPPICAV, FPI or comparable foreign entities) and entities whose shares in properties located in France do not exceed € 100,000 or 5% of the property market value. So as to simplify the declarative obligations for certain entities, the new legislative package exempts them from declaring any shareholders holding less than 1% of their capital. A partial tax relief in proportion to shareholders whose identity has been disclosed to the tax authorities also applies. Please note that these exemptions are applicable with respect to entities residing in the European Union and foreign entities residing in any country that has entered into a double taxation agreement with France, containing an administrative assistance clause or a non-discrimination clause, subject to certain exceptions. Finally, the deadline for filing the tax form n° 2746 (and, if need be, for payment) for 2008 has been postponed until 15th September 2008.
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