A change in the French capital gains tax system was announced on the 16th June 2013 by President François Hollande. These changes specifically affect the sales of second homes in the country and ain to inject greater flexibility into the property market.
Currently, the French property market is immobile, with the economy, tax rates, and financial recession all contributing to the lack of movement. Government plans drawn up by the French Budget Minister Bernard Cazeneuve propose the reformation of the real estate capital gains tax in France. This will apply to capital gains realized from the sale of real estate, other than a taxpayer’s main residence and rented property.
The changes are due to come into effect on the 1st of September, 2013, and will be included in the 2014 finance bill. The following changes are due to be made:
- Progressive tax reductions on the holding period of capital gains. The qualifying period for full exemption from income tax on real estate capital gains is lowered to 22 years, from 30 years.
- Progressive social levy reductions for social contributions (CSG/CRDS). After 30 years, complete exemption from social contributions will be granted.
- A 25% tax reduction will apply to property sales realized between September 1, 2013, and August 31, 2014, to give an initial boost.
- Government fiscal incentives encouraging constructible land retention are due to be abolished in favour of the housing development market.
These tax reductions are significant in making the French property market much more accessible and profitable. By offering a short term 25% reduction, the activity in this market should increase in a fairly short period of time and introduce recovery into the property market for the long term.
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France’s changes to capital gains tax mark a significant shift in the property and investment landscape. By reducing the full exemption period for income tax on capital gains from 30 years to 22 years, and offering progressive social levy reductions, the government is creating a more flexible, attractive environment for both residents and international investors. The short-term 25% reduction in property sales between September 2013 and August 2014 highlights a targeted strategy to immediately boost transactions and encourage confidence in the real estate market.
For investors, these reforms signal opportunity. Lower barriers to selling second homes and investment properties will stimulate liquidity and create a more profitable property market. Combined with France’s central location in Europe, robust infrastructure, and high demand for housing, these tax reforms create the right conditions for growth and long-term returns.
At Open A European Company, we guide property investors, entrepreneurs, and corporations in navigating France’s evolving tax and legal framework. From structuring investments to ensuring compliance and handling company formation in France, we provide end-to-end support that maximizes opportunities while minimizing risks.
Now is the right time to expand in France. Partner with us today and benefit from tax-efficient strategies in one of Europe’s most attractive property markets.
