Tax rises, artisan fees: Five updates for property owners in France

We also look at a court case about what you can (and cannot) build on ‘constructible’ land

This week we cover taxe foncière, taxe d'enlèvement des ordures ménagères, rising trade costs and laws around constructible land
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Local authorities vote to raise rates for property ownership tax

Many local authorities are increasing their rates which govern the level of France’s taxe foncière property ownership tax with the average rise being 1.4% this year.

This comes after it was announced in April that the values used to calculate the other main part of the tax will increase by 3.4%. It means the increase of local-level rates is essentially a raise on a raise.

Read more: Taxe foncière bills rising by over 10% in several French towns

A new report carried out by the consultancy group FSL, which specialises in local taxes, shows the rises voted on by local communes (and in some cases intercommunal bodies) in the 192 towns and cities in France with a population of over 40,000.

In the majority of towns and cities studied, including Paris, Grenoble, Lille, and Rennes, the rate will remain unchanged.

However, it is set to increase significantly in some places including Marseille (+12,7%), Martigues (+14,2%), Bagnolet (+15%) and Mantes-la-Jolie (+18,8%).

In other large cities, the increases are more moderate, for example, Aix-en-Provence (+0,5%), Clermont-Ferrand (+0,9%) Dijon (+1,6%) and Toulon (2.3%).

Taxe foncière bills are based on two elements.

The first is on the amount that the property could in theory be rented out for - this is known as its valeur locative cadastrale (VLC).

The Direction générale des finances publiques (DGFiP) tax authority already confirmed last month a 3.4% rise to the values used to calculate this year’s property tax, the highest since 1989. In 2021, the percentage increase was only 0.2%.

Your final bill will be based on half of the VLC, to which local communes (and in some cases intercommunal bodies) also apply a percentage rate, decided on by a vote.

It is these local rates that have been revealed by FSL, first reported by finance magazine Capital. The article linked (paywall) shows the local rate changes in all 192 towns and cities studied.

Jérôme Barberet, the director of studies at FSL, told Capital that the increase in many of the local rates are due to multiple factors.

He said that newly-elected local authorities tend to increase rates shortly after municipal elections. The last elections were in 2020, but Mr Barberet said that Covid probably meant the authorities pushed back the increases slightly.

“The new teams have established their financial “plans for their [six-year] term, including the investments they will make and the money they will need,” he said.

“It is therefore not surprising that they have decided to increase taxation.”

He also said that the Covid pandemic itself has had an impact on local authorities’ budgets, which they may be trying to address.

Read more: French home waste collection charge on rise - who pays this and how?

Tradespeople raise prices to match supply costs

A survey of 1,700 tradespeople in France has found that 60% of them increased their prices in April to deal with rising construction and material costs.

The study was carried out by Capeb, an association representing tradespeople in France. In January this year, 45% of tradespeople increased their prices to match rising costs.

The cost of building materials and rising energy prices have impacted France’s trade and construction sectors. These increases have been caused in part by Russia’s invasion of Ukraine, with both countries being important suppliers of raw materials to France.

“One of the difficulties for our companies is that the supply prices that are given to our companies are sometimes only valid for a few hours. This makes it difficult for artisans to correctly assess their future costs," Jean-Christophe Repon, head of Capeb, wrote in the report.

"For many companies, the validity of an estimation presented to a customer is now limited to 15 days.”

The table below shows the percentage of respondents to the survey who said that they had to increase their prices in April, broken down into different trades.

The trades were grouped together slightly unorthodoxly by Capeb.

Read more: Cost of home DIY projects rises due to shortages: should you delay?

Rises of almost 200% for waste tax in some areas

Other local taxes, such as the household waste tax, called the taxe d'enlèvement des ordures ménagères (TEOM) will also increase in certain places, along with the taxe foncière.

The TEOM, where it is levied, is combined with bills for the taxe foncière (some areas have an alternative tax called REOM).

We reported in our property roundup last week that 77% of local authorities in France planned to increase the TEOM by at least 5%.

New figures, also provided by the FSL and reported by Capital today (May 19), confirm significant rises in many of the towns and cities with a population of over 40,000 people.

For example, in Ivry-sur-Seine (Val-de-Marne), the bill will rise by 191.88% this year.

In Aubagne (Bouches-du-Rhône), it will increase by 44.76%, in Beauvais (Oise) by 49.25%, in Rennes (Ille-et-Vilaine) by 36.05% and in Troyes (Aube) by 34.82%.

In many other cities the rise will be between 3% and 10%, but the rate is set to increase in almost all towns and cities with a population of over 40,000.

Exact figures for smaller towns and villages are not yet known.

Read more: French home waste collection charge on rise - who pays this and how?

Read more: Local taxes, energy audit: Four updates for property owners in France

New court ruling on land ‘à bâtir’

Even if it is legal to build certain buildings on a piece of land, it does not mean that any type of building can be built on it, a recent decision by France’s top appeal court, the Cour de cassation, shows.

It comes after an evicted landowner went to court to argue against this.

The person in question wanted to build a different type of building to what was deemed permitted on their land, which was only 'public facilities' or the right to extend in a limited manner certain other buildings already constructed.

The Cour de cassation ruled that this factor did not in general mean the land fell into the category of à bâtir, meaning open to construction projects.

A similar ruling was handed down in 2012 for a piece of land that was only à bâtir for professional structures linked to farming.

So, while it is possible for certain structures to be built on land that is not technically à batir, it does not mean that any kind of structure can be built.

Update on southwestern island vs Airbnb

Holiday accommodation rental platform Airbnb has accepted demands from a French island to pay €468,000 in unpaid tourist taxes.

In France, properties that are rented out for short stays to tourists are, in certain areas of the country, subject to a yearly tourist tax called the taxe de séjour.

The Île d'Oléron (Charente-Maritime), which is just south of La Rochelle, levies this tax.

Booking platform Airbnb is supposed to collect the tax from its users who rent out their properties on the platform and then pay the tax over to the local authorities.

But the Communauté de communes (CC) of the Île d'Oléron has claimed that Airbnb is still due to pay €468,000 for 2020 and 2021.

We reported on this story in our property update last week, and Airbnb has since accepted to pay the CC the entire sum due.

“For 2021, we found a technical error related to a data management problem. We have now corrected it," Airbnb has stated.

"We are acting in good faith and are working in partnership with Oléron.”

Despite agreeing to pay the entire sum, Airbnb is launching a legal challenge to the amount demanded by the CC for 2020. It claims that the island authorities have not used correct methods to calculate the taxes due.

Read more: Local taxes, energy audit: Four updates for property owners in France

Read more: Airbnb and tax, €1 house: Four updates for property owners in France

Read more: How do we declare letting income on our French second home?

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