Progressive decrease in French CIT rate and consequences on taxation of non-residents’ real estate capital gains

French real estate capital gains realised by non-residents are subject to a withholding tax of 33.1/3% subsequently creditable against French CIT.

With the new Finance Act for 2017, however, the standard French CIT rate will progressively decrease to 28% over the period from 2017 to 2020.

This decrease is expected to affect the withholding tax rate. However, under a strict reading of the referral made by article 244 bis A of the French tax Code to the standard rate of corporate income tax, the 33.1/3% rate should remain applicable to non-residents until fiscal year ended 31 December 2019.

The question then arises as to whether the progressive decrease in rate can still apply and how, to companies that, if established in France, would meet the criteria for benefiting from the reduced rate.

Photo de Sarvi Keyhani
Sarvi Keyhani

Sarvi Keyhani, Partner, is specialized in real estate tax. She assists international investors into complex real estate transactions. She particularly advises many international real estate funds about the structuring of […]

Soufiane Jemmar

Soufiane Jemmar, International Tax Director at Deloitte Société d’Avocats specializes in real estate tax. He advises French and international private equity funds within the framework of their inbound and outbound […]

Gladys Elisabeth

Gladys is a tax lawyer based in Paris. She joined Deloitte Société d’Avocats in 2014, the French law firm of the Deloitte Network. She regularly advises French and international private […]