The French government has just announced that second homeowners in France could be subjected to a new tax if they don't live in the country and don't pay French taxes. It's likely to apply to people who don't rent out their properties as owners who collect a rental income are likely to be unaffected by the new tax.
It looks as if the tax would be equivalent to 20% of the cadastral rental value and it is expected that this tax will bring in an extra €176 million to government coffers every year. As yet there isn't a firm date for this new law to be implemented, but it's expected it could be as early as January 2012 and that the new law will be passed in Parliament this summer.
The French budget Minister, François Baroin has defended this new bill on the basis that anyone owning a second home doesn't contribute towards national services and infrastructure even though they benefit while in the country.
It's widely thought that there will be a six-year period of grace for people who had previously been French tax residents before moving abroad. It is also likely that anyone who paid taxes in France for three years during the last decade for leaving the country could benefit.
This change could affect 360,000 second home owners who are mainly British and Dutch citizens.
There are questions being raised about the legality of the new law under EU laws even though it has clearly been written to apply to French citizens as well as overseas buyers. The European commission has already announced its going to take a look at this draft law but the reality is that member states are free to set their own tax laws.
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