bil for nordic clients
TRANSCRIPT
BIL for Nordic clients2019
Welcome!Tax experts:
Adélaïde Mercier and Åsa Åhlund
Private Bankers:Peter Clemmensen and Rickard Linderoth
• Presenting BIL
• Wealth and inheritance taxes- what can you do about it?
The oldest and largest full service bank in Luxembourg
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Stability BIL is the oldest bank in Luxembourg, partly owned by the Luxembourgish state and one majority shareholder. BIL is involved in almost every major business in Luxembourg.
Flexibility BIL is small enough to be personal with our clients and flexible enough to arrange solutions to serve their specific needs.
Resources Our resources are centralised in Luxembourg, meaning we have highly experienced experts to serve our clients directly. Investment Management is also supported by our operations in Switzerland and other countries.
BIL Nordic Market
▪ Largest market with strongest growth in BIL
▪ Nordic experts and managers in different positions
▪ Swedish CIO and Swedish speaking Asset Managers
▪ Branches in Denmark
▪ Representative office in Stockholm
▪ Focus Market since 2000
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How we work
Förmögenhets-
planering
Maximise your
wealth
Wealth analysis
and planning
Asset ManagementSuccesion planning
and next generation
PensionsFinancing
Corporate
structuresRelocation
Day-to-Day
banking
Stable bank with flexibility and great resources
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International services and products for all clients
▪ Tailor made mandates in european, american and global markets
▪ Managing all major currencies strategic and tactically
▪ Analyses and reports from international markets
▪ International tax relief and tax reclaim services
▪ International credit structuring
Special services and products for Nordic clients
▪ Discretionary and advisory nordic mandates
▪ Analyses and reports from Nordic banks
▪ Tax relief and tax reclaim services
▪ Suitable Insurance solutions
▪ Company registration in diverse legislation
Historical returnUpdated 2019-08-31
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Please observe that past performance is no guarantee for future return on investments
Wealth tax and inheritance tax in France- What are your options?
2019
Wealth tax and inheritance tax in France
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▪ French Income Tax – General Principles.
▪ Capital gain taxI. French Capital gain taxII. Swedish – French treaty regarding capital gain taxIII. No treaty between France – Denmark on capital gain tax
▪ Wealth taxI. French real estate wealth taxII. No treaty between Denmark and France on wealth taxIII. Swedish – French treaty regarding wealth tax
▪ Inheritance taxI. French inheritance tax and gift taxII. Swedish – French treaty regarding inheritance tax and gift taxIII. No treaty between Denmark and France regarding inheritance tax and gift tax
▪ Examples
French Income Tax – General Principles
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Article 4 A of the French General Tax Code (Code Général des Impots)
▪ Tax resident in France
taxation of worldwide income
subject to applicable tax treaties
▪ Tax resident outside France
taxation of income generated in France
subject to applicable international tax treaties
French tax framework in 2019 – capital gain
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▪ Capital gains tax on real estate (PIT)
• * For residents outside of EU and EEA and french residents
• **EU, EEA and Switzerland
Personal Income Tax 19 %
Social Contributions 17,2 %*/7,5 %**
Exceptional contribution 3 or 4 %
Additional capital gains tax Max 6 % (if gain >260kEUR)
Total (max) 46,20 % / 36,5 %
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Reduction of the tax rate depending on the holding period
Ownership period
Reduction of the tax rate depending on the holding period
Capital gains (tax rate 19 %) Social tax (tax rate 7,5 % or 17,2 %)
Less than 6 years 0% 0%
From 6 to 21 years 6% (on the net gain) 2% (on the net gain)
22 years 4% (on the net gain) 2% (on the net gain)
More than 22 years Exempt 9% (on the net gain)
More than 30 years Exempt Exempt
▪ Capital gains tax – reduction of the tax depending on the holding period
▪ Capital gain on sale of main residence; exempt from taxation
French tax framework in 2019 – capital gain
Sweden – France Income and Capital Tax Treaty – capital gain
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Article 13 13.1 Gains derived by a resident of a Contracting State from the alienation of immovable property
referred to in Article 6 and situated in the other Contracting State may be taxed in that other State.13.4 Gains from the alienation of movable property forming part of the business property of a
permanent establishment which an enterprise of a Contracting State has in the other Contracting State or ……….. may be taxed in that other State
Article 23…..Where a resident of Sweden derives income which, in accordance with French law and the
provisions of this Convention, may be taxed in France, Sweden shall allow as a deduction from the tax it levies on the income of that resident, an amount equal to the French tax paid on that income. This deduction shall not, however, exceed that part of the tax on income, as calculated before the deduction is given, pertaining to income which is taxable in France……
▪ Sweden and France have the taxation right for capital gain under the double tax treaty
▪ Normally not an issue
No treaty between Denmark and France – capital gain
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French taxation Taxation in France under domestic rules regarding capital gain tax
Danish and French For resident in Denmark danish legislation will also apply- possibility to deduct the tax already paid in France under certain conditions
Danish taxation The same regulations apply for the sale of a Danish property and a foreign property
If the house has been used mainly privatley, the gain is not taxable under Danish legislation. If the house has been rented out the potential gain is taxable in Denmark.
French tax framework in 2019 – wealth tax
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▪ Real estate wealth tax in France
▪ Only on property situated in France valued above 1,3 MEUR for non-residents
▪ For French resident; worldwide
▪ Limitation of possibility to deduct mortgages
Net value Rates
< 800 000 € 0 %
800 000 € - 1 300 000 € 0.50 %
1 300 000 € - 2 570 000 € 0.70 %
2 570 000 € - 5 000 000 € 1 %
5 000 000 € - 10 000 000 € 1.25 %
> 10 000 000 € 1.50 %
No treaty between Denmark and France
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French taxation Taxation in France under domestic rules regarding wealth tax
Danish and French Certain french taxes can be deducted from the danish property tax
Deductible Taxe foncière sur les propriétés bâties (for the part of the real estate the owner is usig privately)
Taxe d´habitation (for the part of the real estate the owner is usig privately)
Danish taxation Danish property value tax of 1 % up to DKK 3,040,000 and 3 % based on property value 2001/2002.
The Danish property tax does not apply of the house is rented out. It should be taxedinstead under the « virksomhedsskatteordning » (corporate tax regulation). NO private use if these regulations should apply.
https://skat.dk/skat.aspx?oid=2234792
Sweden – France Income and Capital Tax Treaty – wealth tax
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▪ Both France and Sweden could have the right to taxation under the treaty.
▪ For French residents; A Swedish company holding less than 50 % of its assets in real estate will not be taxable with french real estate wealth tax in accordance with the treaty.
▪ There could be issues to consider from a Swedish viewpoint if the person has recently left Sweden (väsentlig anknytning).
▪ Private use of the property will then be taxable as a benefit or market rent have to bepaid for the use.
Article 22
1. Capital represented by immovable property referred to in Article 6, owned by a resident of a Contracting State and situated in the other Contracting State, may be taxed in that other State.
2. Capital represented by shares, stocks or other rights in a company or legal entity of which the assets consist principally of immovable property or rights therein may be taxed in the Contracting State in which such property is situated. For the purposes of this provision, immovable property used by such company or legal entity for its own industrial, commercial or agricultural exploitation or to carry out a non-commercial profession shall not be taken into consideration
French tax framework in 2019 – inheritance tax and gift tax
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▪ Inheritance and gift tax in France
▪ In direct line; exemption of 100 000 € per parent every 15 years
▪ Exemption between spouses and registered partners (PACS)
Scale Rates
< 8072 € 5 %
From 8072 € to 12 109 € 10 %
From 12 109 € to 15 932 € 15 %
From 15 932 € to 552 324 € 20 %
From 552 324 € to 902 838 € 30 %
From 902 838 € to 1 805 677 € 40 %
>1 805 677 € 45 %
Sweden – France inheritance and gift tax treaty
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▪ Both France and Sweden could have the right to taxation under the treaty.
▪ Only taxable in France under current domestic legislations
▪ Possibility to chose civil law that applies to an estate - EU directive
Article 5 Immovable property
▪ “ImmContracting State may be taxed in that other State.
▪ The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated, being understood, however, that mortgages or other debt-claims secured by immovable property shall not be regarded as immovable property. The term shall in any case ……”
Article 12 Elimination of double taxation
▪ Double taxation shall be avoided as follows:
▪ The Contracting State in which the deceased was domiciled at his death, or the donor was domiciled at the time of the gift, shall levy tax on all the property which forms part of the estate or the gift, including property liable to tax in the other Contracting State under the provisions of this Convention, and shall allow as a deduction from such tax an amount equal to the tax paid in the other State on any property which, in relation to the same event and in accordance with the provisions of this Convention, may be taxed in that other State. Such deduction shall not, however, exceed that part of the tax in the first-mentioned ovableproperty which forms part of the estate of, or of a gift made by, a person domiciled in a Contracting State and which is situated in the other Contracting State, as computed before any deduction is made, which is attributable to the property in respect of which the deduction is to be allowed
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Structures
SCI
Danish
Individual 1
Danish
Individual 2 French SCI – positive aspects• Transparent company from a tax perspective• No notary required for transfer of shares• Transferability – easier to the next generation• Less administration• 5 % taxes on transfer vs 7 % private ownership• Civil law in country of residence could apply on the
estate (depending on the country of residence)
French SCI company
French SCI – negative apsects• Private use - Nordic countries require that you pay rent
for using the house at market value or taxed for the benefit
• Not interesting if not already in place at purchase, transfer to SCI trigger capital gain tax
Sale of the full property
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A non resident family with three children, the parents are 74 and 80 years old.
Villa in south of France 5 MEUR with 3,8 MEUR mortgage
Transfer tax, capital gains tax and wealth tax
Total tax EUR 400 000
Transfer tax + wealthtax
Transfer tax + wealth tax
Aim and advantages of the operation• No inheritance tax• Wealth tax limited since paid by 3 children EUR 40 000
15 years (based on todays value)• Transfer tax EUR 360 000
Transfer tax + wealth tax
Gift of the full property without the mortgage
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A non resident family with three children, the parents 74 and 80 years old.
Villa in south of France 5 MEUR with 3,8 MEUR mortgage
Gift tax and wealth tax for the children
Total tax EUR 1 150 000
▪ Full property 2 500 000 EUR
▪ No mortgage considered▪ Full property 2 500 000 EUR
▪ No mortgage considered
Gift tax and inheritance tax Gift tax and inheritance tax
Aim and advantages of the operation• Each parent can gift 100,000 EUR to each child without
taxation• Parents will pay the mortgage• No inheritance tax
Gift of the full property with the mortgage
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A non resident family with three children, the parents are 74 and 80 years old.
Villa in south of France 5 MEUR with 3,8 MEUR mortgage
Gift tax and wealth tax for the children
Total tax EUR 150 000
▪ Full property net 600 000 EUR
▪ Wealth tax divided on three▪ Full property net 600 000 EUR
▪ Wealth tax divided on three
Gift tax and wealth tax Gift tax and wealth tax
Aim and advantages of the operation• Each parent can gift 100,000 EUR to each child without
taxation• Children have to pay the mortgage• No inheritance tax
Gift the bare property and keep the usufruit
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A non resident family with three children, the parents are 74 and 80 years old.
Villa in south of France 5 MEUR with 3,8 MEUR mortgage.
Gift tax and wealth tax for the children
Total tax EUR 480 000
▪ Full property 600 000 EUR
▪ Bare property 420 000 EUR▪ Full property 600 000 EUR
▪ Bare property 420 000 EUR
No gift tax and inheritance tax No gift tax and inheritance tax
Aim and advantages of the operation• Each parent can gift 100,000 EUR to each child without
taxation• By gifting the bare property of the house the gift tax
will be quite limited • Wealth tax 480 000 EUR 15 years (on todays value)• Children have to pay the mortgage
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Contact: Rickard Linderoth
Senior Client Advisor
+352 621 988 391
Contact: Peter Clemmensen
Senior Client Advisor
+352 621 319 004