Article 244 bis A of the General Tax Code (CGI) stipulates that sellers domiciled (established or incorporated) outside the European Union (EU), the European Economic Area (EEA) or Liechtenstein must appoint an accredited tax representative in the event of the sale of a real estate asset (real estate or shares in a company with a majority of real estate interests) located in French territory.
Steps required before defining tax representative obligations
1. The persons responsible for appointing an accredited tax representative for real estate capital gains
The first step is with regard to persons required to appoint an accredited tax representative for real estate capital gains, this applies in particular to non-residents who are natural persons i.e. those who are not domiciled in France as defined in Article 4B of the CGI when selling their real estate located in France.
Legal entities (companies or other entities) in any form whose registered office is located outside France when selling their real estate located in France are also required to appoint a tax representative.
Finally, companies known as translucent companies or groups (covered by Articles 8 to 8b of the CGI) whose registered office is located in France are obliged to appoint an accredited tax representative if at least one shareholder of the transferring company is a non-resident natural person or if the entity has its registered office outside France.
2. Transactions which are subject to the obligation to appoint an accredited tax representative under Article 244 bis A of the CGI
The requirement to appoint an accredited tax representative only applies to transfers for consideration made by a non-resident in accordance with tax regulations.
In particular, transfers for consideration include sales of real estate, contributions of real estate to a company, exchange transactions and, in general, any transaction involving consideration in favour of the non-resident assignor.
Regardless of whether the transaction generates a taxable capital gain or loss, the notary or tax lawyer in charge of the transaction is the one who can determine whether or not it is necessary to appoint a tax representative.
3. Property transfers that require the appointment of an accredited tax representative
Although the property of a non-resident may include any type of assets, only real estate or shares in a company that is predominantly real estate in nature shall, at the time of their transfer, be required to appoint an accredited tax representative.
However, a tax representative is required only if the sale price of the property exceeds 150,000 euros and if the non-resident seller has held the property for less than 30 years
4. Obligations of the accredited tax representative
In its capacity as a tax representative accredited by the General Direction of Public Finance (DGFIP) GPB ACCREDITE calculates the capital gain on real estate and determines the income tax, social security contributions and, where applicable, betterment tax on the transaction.
In addition to calculating the capital gain on real estate and determining the related taxes, the tax representative is jointly and severally liable with the seller for the proper payment of the capital gain to the tax authorities.
Being a privileged partner of the notary and the tax lawyer, the tax representative ensures that all the non-resident’s tax obligations are complied with and is therefore responsible for all requests made by the tax authorities with regard to the property transfer for which the representative has been appointed.