Tom Burroughes
Group Editor
5 July 2012
Daily News Analysis
In a possible sign of how the recent election of a socialist government in France could accelerate flows of wealthy individuals to the UK, the Daily Telegraph reported that foreign owners of holiday homes in France will pay higher taxes.
There are an estimated total 360,000 non-resident second home owners in France, the publication said, of whom around 200,000 are from the UK. Popular areas include the Dordogne region.
The French government has announced total tax hikes to collect €7.2 billion ($9.2 billion) as the country wrestles with a large budget deficit. The government said it will hike taxes on foreign-owned second homes. Tax on rental income will rise from 20 per cent to 35.5 per cent, and capital gains tax on property sales would rise from 19 per cent to 34.5 per cent.
The newspaper said that the UK government will check to see if the tax rise breaches the rules under the European Union’s Single Market system, which is designed to prevent competition from being distorted by tax and other national regulations.
Also controversially, a rise in tax on rental income will be retrospective, from 1 January this year, while the capital gains tax hike takes effect form the end of July, giving owners little time to prepare, the newspaper said.
