What is the 3% annual contribution on buildings?

by | Apr 24, 2023 | Corporate taxation, Personal taxation, Real estate taxation | 0 comments

Legal entities owning real estate in France are liable for a 3% tax on the value of this real estate.

This 3% tax on the market value of real estate was introduced by the 1983 Finance Act, with the aim of ensuring the visibility of chains of real estate ownership by French and foreign entities; making it possible to obtain the identity of associates and thus verify the correct application of the wealth tax (ISF), now replaced by the real estate wealth tax (IFI).

In principle, this tax is payable by all French or foreign legal entities owning one or more properties in France, but as legislation has evolved and case law has been favorable to the taxpayer, the scope of the tax has gradually been narrowed. Today, there are many cases of exemption.

What are the entities involved?

In accordance with

articles 990D
to 990G of the CGI
the 3% tax applies to ” entities legal persons, organizations, trusts or comparable institutions which, directly or through entities vias, have one or more buildings located at in France or are holders of rights real on these goods are liable for an annual tax of equals à 3% of value market value of these properties or rights”.


Article 990 E specifies the cases in which the 3% tax may be waived. A number of entities are exempt from reporting obligations:

  • This is the case for international organizations, states and their political and territorial subdivisions, and legal entities over which they have majority control;
  • Legal entities that cannot be considered as real estate companies, i.e. whose real estate assets located in France represent less than 50% of French assets held directly or indirectly.
    Finally, only real estate companies (such as SCIs) are concerned.
  • Listed legal entities

In the absence of automatic exemption and when the legal entities concerned are headquartered within the European Union or in a country that has signed an administrative assistance agreement with France to combat tax evasion and avoidance. They will benefit from preferential treatment, but will still have to complete the annual form n°2746which must be paid before May 16 of each year during the period the property is held. The declaration must be sent electronically (
CGI art. 1649 quater B quater, XII

This is particularly true of pension funds and other non-profit organizations.

This is also the case for entities committed toprovide the tax authorities, at their request, with: the location, composition and value of properties owned on January 1, the identity and address of all shareholders, partners or other members who hold, in any capacity whatsoever, more than 1% of the shares or other rights, and the number of shares or other rights held by each of them.

Reporting obligations

Legal entities must submit two copies of declaration no. 2746, together with payment of the tax, by May 16 of each year. This declaration must indicate the location, the extent and the market value of the taxable buildings or real estate rights.

Altertax’s teams regularly assist clients active in the real estate sector to identify their tax obligations in relation to the ownership of real estate in France.

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What is the annual 3% contribution on real estate?

Legal entities that own real estate in France are subject to a tax of 3% on the value of their properties. This tax on the fair market value of real estate was introduced by the 1983 Finance Law with the objective of ensuring visibility of the chains of ownership of properties by French and foreign entities, allowing the identification of shareholders and thereby verifying the proper application of the Wealth Tax (ISF), now replaced by the Real Estate Wealth Tax (IFI).

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