ISF (Impôt Sur la Fortune – Wealth tax)

16 juin 2012, Baya Derriche
 
The ISF (wealth tax) threshold goes from de 800 000 euros to 1,3 million euros of net assets, and reduction of rates is included
 
 
According to the government this measure will alllow to exempt 300 000 taxpayers and the first tranche of the ISF. The assets between 1,3 and 3 millions Euros will be taxed at 0,25% and those exceeding 3 millions at 0,5%, while current rates were from 0,55% to 1,8%.
 
 
Parallely the government has decided to abolish the tax shield referring to revenues received in 2011, introduced by Nicolas Sarkozy in 2007, this shield limited the total levies to 50% of the revenue. Those whose net taxable assets are below 1,3 million Euros shall be exempted of ISF starting from this year. But those whose assets are above will be taxed and will have to pay according to the old scale. Because of these new measures the payment of this tax has been deferred from June 15 to September, 30.
 
 
Marie Perardelle, Director of Assets Engineering at Groupe Primonial precises: "If economy from ISF have a priori consequences for big assets, loss from tax shiel benefit should be balanced. For example, a taxpayer paying ISF in the amount of 46 585 € before the reform and benefitting from tax refund amounting to 30 000 € (i.e. real net ISF amounting to 16 585 €) will have to pay, with this new ISF scale, the ISF of 27 750 € without any refund possibility, thus having fiscal surcharge of more than 67%".
 
 
With the new ISF scale all taxpayers should have seen their ISF reduced starting from 2012 from some hundreds of Euros to thousands of Euros.
 
 

Net Taxable assets	ISF economy starting from 2012
1 330 000 €	850 € (29% of economy)
1 380 000 €	1 105 € (33% of economy)
3 050 000 €	7 430 € (44% of economy)
4 500 000 €	10 435 € (32% of economy)
10 000 000 €	62 450 € (55% of economy)
18 000 000 €	156 265 € (64% of economy)

 
 (Source Groupe Primonial)
 
New taxation...
 
Alleviation of the ISF and aboulishment of tax shield require to obtain 900 millions of new receipts. In order to find this amount, the government did not want to use life insurance, it has been modified… the deputies have adopted an amendment to increase the  withholding from 20% to 25% for the share of taxed life insurance exceeding 902 838 euros, in case of  contract termination because of decease (art. 990 I of the Tax Code).
 
«This measure makes part of the draft bill that envisages withholding of 5% of the two last tranches of the scale of donation and succession rights (mesure concerning only taxable transmissions exceeding 902 838 € per beneficiary), the deputies arguing that it should be the same for life insurance. The deduction of 152 500 Euros per beneficiary will be maintained» points out Marie Perardelle.
 
The government takes on also fiscal exiles in creating « exit tax » and to collect from big patrimonies. The text stiffens the taxation of successions, and 10 years should pass (not six as before 2007) between two donations to benefit  from tax exemption. The rates on donation in direct line will be increased from 35% to 40% and from 40% to 45%.
 
 
 
Certain advantages...
 
Good news is tax reduction going from 150 euros to 300 euros per person in charge including children of age who are stufying, and another good news is the possibility to make a tax-free gift (not exceeding 31 865 €) per child or grand-child renewable every ten years while before it was only possible one time!