Tax alert – 2019 French Real Estate Wealth Tax (“IFI”)

Tax alert – 2019 French Real Estate Wealth Tax (“IFI”)

The capping on the 2019 French Real Estate Wealth Tax (“IFI”): A potential claim for excess of power

In order to prevent the tax from reaching confiscatory amounts in relation to the taxpayer’s income, the legislator has set up a ceiling mechanism codified in Section 979 of the French Tax Code (“FTC”).


This mechanism is designed to prevent the total of IFI and Personal Income Tax (including Social Security Contributions) for a given year from exceeding 75% of the income of the previous year. In the event of a surplus, it is deducted from the IFI payable.


This mechanism could not work for the 2019 IFI as the Income Tax and Social Contributions relating to the income of the year 2018 were neutralised by a tax credit (called “CIMR”). As the tax has not been paid, the French tax authorities have refused to apply this capping mechanism.


Taxpayers who could benefit from this mechanism could claim an unjustified difference in treatment compared to other taxpayers who have effectively benefited from the “CIMR”.


These taxpayers were subject to a confiscatory tax burden since they paid a tax in excess of their income forcing them to dispose of their capital.


These effects seem likely to constitute a marked break in equality before public charges.


It seems possible to bring an action for excess of power against the French tax authorities’ guidelines published on November 22, 2018 in the BOI-PAT-IFI-40-30-10 n° 130 paragraph 4, which provides that the CIMR is offset against the amount of taxes to be taken into account for the computation of the ceiling of the IFI 2019.


La Tour International remains at your disposal to assist you in this process. All claim will be subject to a preliminary investigation of your file.
Benoît Philippart, Avocat Associé – +33 1 42 25 78 92 / +33 6 30 74 27 35
Nicolas Cys, Avocat Associé – +33 1 42 25 78 84 / +33 6 87 44 81 68