French taxe d’aménagement explained

While it might appear to be yet another tax to pay, the taxe d’aménagement is actually a welcome addition for those developing property in France, as Robert Kent explains

The development tax is relatively new, having been introduced in 2012, and is applied to those developing property. While hearing of a new tax might have you throwing up your hands and crying zut alors, this one is actually quite a welcome development because it serves to replace five other taxes that were applied to those developing property.

What is taxable?

The tax is applicable to all building work including any construction, reconstruction and expansion of buildings or facilities which require planning permission. It normally consists of two parts: the part established by the local commune authority, and the departmental part, charged by the department council. There may be a third charge in Île-de-France (Paris area), which is a regional charge that is applied by the regional council.

On what is the tax assessed?

This tax is applied to all closed and covered surfaces over 1.8m high and is measured by the exterior wall, meaning the area includes the thickness of the walls (so not to be confused with habitable area). Lofts and cellars are included if the ceilings are above 1.8m and also annexes such as garden sheds. A terrace is not included (unless it is enclosed like a veranda). It may also include uncovered construction work such as swimming pools and exterior parking spaces. The amount of tax due is calculated using the following formula: Taxable area x standard value x percentage rate set by the local authority.

Standard values

The standard values are updated annually based on the consumer price index of construction, or l’indice du coût de la construction (ICC). In 2014, the values were:

• €712/m²

• €807/m² in the Île-de-France region.

For some development and landscaping, the calculation of the standard value is different:

• Light dwellings: €10,000 per development

• Pool: €200/m²

• Exterior parking: €2,000-€5,000

• Ground-mounted solar PV panels: €10/m²

Tax rate

The rate of the commune’s share is normally between 1% and 5%.

The rate of the departement’s share is unique and cannot exceed 2.5%.

For the regional share, the rate may not exceed 1%, but the figure may vary between the different departments.

Exemptions

There are many exemptions, but these are the main ones that might be of interest:

• Constructions with a surface area less than or equal to 5m²

• Agricultural facilities, such as greenhouses, crop storage and equestrian centres

• Buildings destroyed or demolished less than 10 years ago which have been rebuilt identically

• Work relating to historical monuments

• Annexes, such as garden sheds and garages, are subject to prior declaration.

Allowances

A 50% reduction is applied to:

• Subsidised housing and social accommodation

• First 100m² of residential premises used as main house

• Local artisanal or industrial use, including warehouses and stores not open to the public subject to commercial exploitation.

Payment

The fee can be paid in two equal parts after the permit is granted. The first payment is due one year after and the second payment two years after. If the amount is less than € 1,500, it must be paid in one go.

An example

In order to illustrate these figures, I have chosen a principal residence, outside the Île-de-France, with a taxable surface of 150m². I have assumed a commune tax rate of 3%, a departmental rate of 1%, two exterior parking spaces at the rate of €2,000 and a swimming pool which covers 25m²:

Commune payment

Taxable surface of first 100m²: 100 x 356 x 3% = €1,068

Taxable surface of next 50m²: 50 X 712 x 3% = €1,068

Two exterior parking spaces: 2 x 2,000 x 3% = €120

Swimming pool (25m²): 25 x 200 x 3% = €150

Departmental payment

Taxable surface of first 100m²: 100 x 356 x 1% = €356

Taxable surface of next 50m²: 50 x 712 x 1% = €356

Two exterior parking spaces: 2 x 2,000 x 1% = €40

Swimming pool (25m²): 25 x 200 x 1% = €50

Total: €3,208

As you can see, even with the 50% allowance applied to the first 100m² this tax is not insignificant and needs to be planned for when calculating the cost of building work.

There are many other things that you might also need to consider before you start building a property in France, so it is worth taking professional advice before you begin.

Robert Kent is managing director of Kentingtons Tax and Investment Consultants

Tel: 0033 (0)4 98 10 12 55

www.kentingtons.com