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What is the annual 3% contribution on real estate?

What is the annual 3% contribution on real estate?

by | May 17, 2023 | Corporate taxation, Current Operation | 0 comments

Free translation – for information purposes only

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).

In principle, this tax is due by all French or foreign legal entities owning one or more properties in France, but over time and thanks to favorable case law, the scope of this tax has gradually narrowed. There are now many cases of exemptions.

Which entities are concerned ?


Under Articles 990D to 990G of the French Tax Code, the 3% tax is applicable to “legal entities: legal persons, organizations, trusts or comparable institutions that, directly or through interposed entities, own one or more properties located in France or hold real rights on these properties are subject to an annual tax equal to 3% of the fair market value of these properties or rights.”


Article 990E specifies the cases of exemption from this 3% tax. A number of entities are exempt from reporting obligations :

  • This is the case for International Organizations, States and their political and territorial subdivisions, and the legal entities they predominantly control;
  • Legal entities that cannot be considered as having a real estate predominance, that is to say, whose real estate assets located in France represent less than 50% of the French assets held directly or indirectly. Ultimately, only real estate dominant companies (such as SCI) are concerned.
  • Listed legal entities

In the absence of automatic exemption and when the legal entities concerned have their registered office within the European Union or in a country that has concluded an administrative assistance agreement with France to combat tax fraud and evasion, they will benefit from a favorable regime but must nevertheless annually complete form no. 2746, to be submitted before May 16 of each year during the ownership period of the property. The declaration must be transmitted electronically (French Tax Code, Article 1649 quater B quater, XII).

This is notably the case for pension funds and other non-profit organizations carrying out a disinterested activity.

This is also the case for entities that commit to communicating to the tax administration, on its request: the situation, consistency, and value of the properties owned on January 1, the identity and address of all shareholders, members or other persons holding more than 1% of the shares, parts or other rights, as well as the number of shares, parts or other rights held by each of them.

Declaration obligations


Legal entities must submit a declaration no. 2746, in duplicate, accompanied by payment of the tax, before May 16 of each year. This declaration must indicate the location, consistency, and fair market value of taxable real estate or real estate rights.

The teams at Altertax regularly assist their clients active in the real estate sector in identifying their declaration obligations regarding the ownership of real estate in France.


Do not hesitate to contact AlterTax Avocats, a team of tax lawyers with solid experience, for more information.

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