France prepares for Trust investment boom

Following the introduction of its first trust law on the 2 March, huge amounts of foreign investment are expected to flow into the French property market.

What are the benefits?
•     The opportunity for a first-time investment in French leasebacks for foreign pension trustees.

•    High net worth individuals will be encouraged to move offshore funds into the property market without major tax penalties.

•    “It could be one of the biggest developments in overseas property for the next decade,” according to chartered tax adviser David Anderson of law and tax firm Sykes Anderson.

•    More high net worth individuals taking an advantage of the unique property types such as vineyards and ski chalets.

•    A potential immediate benefit to the €10 million + property market.

SIPP leasebacks
Leaseback developers are also excited because of the potential for Self-Invested Personal Pension (SIPP) investment from the UK. A massive interest from current clients has been reported.
SIPPs are not allowed to invest in residential property but developers are confident certain leasebacks would satisfy tax office rules.

The change in law will encourage more SIPP providers to invest in foreign property in order to avoid losing business.

France has signed tax information exchange agreements with a number of tax havens including: Jersey, Guernsey, the Isle of Man, the British Virgin Islands and the Cayman Islands.
The 3 % gross annual tax penalty and the absence of a trust law were two major obstacles for foreign investors so it an amazing turnaround has come about that could even lead to Trusts being able to buy residential property that no-one’s been able to invest in for the last 50 years.