Understanding wealth tax in France

For full, detailed information regarding wealth tax in France, see The Connexion’s dedicated helpguide. 

France often likes to do things differently, and its wealth tax is a prime example. 

France's wealth tax only covers real estate – in other words, buildings and land (including garages, parking spaces and cellars) and certain related rights or investments – and so is called Impôt sur la fortune immobilière ('Tax on real estate wealth'). 

It applies to households whose net property assets in France and, for tax residents of France, abroad exceed €1.3 million, but subject to a five-year exemption on foreign assets (after moving to France) and other deductions such as, importantly, 30% of French residents' main home value.

For those who are not tax residents of France, IFI mainly applies to property physically located in France that you own.

IFI does not cover money in the bank, cars, yachts or many kinds of investment unless they are related to property (despite calls by some politicians to widen it to include more forms of wealth deemed ‘unproductive’, ie. not invested in businesses).

People moving from English-speaking countries such as the US who are unfamiliar with such a tax must be aware of this annual declaration and payment obligation. It is up to individuals to establish if they are eligible to pay this tax and to know the valuation of their property/ies.

The tax due is not necessarily high as there are ways to limit what is included and the final bill. The first €800,000 of net property wealth is also tax free and there is a 30% allowance for your main home.

The key point is that if you qualify for the tax, you must make a declaration. Failure to do so can incur penalties.

What is meant by your fiscal household for IFI?

IFI wealth tax is assessed on households, not businesses. 

Assessment is based on the net property wealth of the household – le foyer fiscal.

For purposes of IFI, this could be, a single person or a couple living together whether married, pacsed, in a recognized foreign civil partnership or cohabiting and any under-18s for whom they are the legal guardians. Cohabiting in this sense means a stable and continuous shared life. 

The property of any adult children attached to your household for income tax purposes is not included (they make their own IFI declaration if applicable.) Nor is any property belonging to disabled adults living under your roof at your expense.

Residency determines eligible assets

If you are fiscally resident in France, eligibility extends to assets and liabilities in and outside France, but bearing in mind the five-year exemption for foreign assets after a person moves to France. 

As discussed in the chapter on French income tax, French tax law states you are a French fiscal resident if your 'home' (foyer) is in the country; this may, for example, be where your spouse and children also live. 

Other tests include whether you spend more of the year in France than elsewhere, whether your job or businesses you run are based here, and whether you manage your financial affairs here.

For those who took up fiscal residency from 2020, foreign assets can be excluded from your assets in the 2026 declaration.

Valuations for the French IFI wealth tax are based on conversion to euros, with Banque de France rates at the end of December of the year before the current tax year being the relevant ones to use. 

The good news is that non-French assets of foreign nationals who come to live in France are exempt from assessment for IFI until the end of the fifth calendar year starting after the year the person becomes fiscally resident.

To be eligible for this exemption the person should not have been fiscally resident in France for any of the five years before the year they became a resident again

Working out the tax due

The property value bands shown below have stayed unchanged for several years. 

Note that while the threshold for becoming eligible to pay wealth tax is €1.3 million in property assets (after deductions including a 30% allowance for a main home) tax is then worked out only on your assessable income from €800,000 of value upwards.

Which assets are deemed exempt?

One major exempt category is 'professional assets'. These are properties or property rights that are deemed to be used directly for the taxpayer's paid work of a commercial, industrial, agricultural kind or in a liberal profession.

It can also relate to company shares such as an SCI which represent holdings in the same kinds of properties, as long as they are used for the taxpayer's work or in certain cases for a member of their family's work.

Commercially managed woods and forests are also excluded as are agricultural holdings rented to farmers. Furnished properties rented out ‘professionally’ are also exempt.

This is not an exhaustive list.