French Real Estate Wealth Tax (IFI): What Chinese Investors Need to Know in 2025

 

French Real Estate Wealth Tax (IFI): What Chinese Investors Need to Know in 2025

 

France’s Impôt sur la Fortune Immobilière (IFI) — or Real Estate Wealth Tax — applies to anyone who owns French-based real estate valued over €1.3 million, including non-residents.

 

If you are a Chinese citizen who owns luxury property in France — either directly or through a structure — it is important to understand your exposure, your obligations, and how you might reduce your liability.

 

What Is the IFI and Who Must Pay It?

 

The IFI was introduced in 2018 to replace the previous wealth tax (ISF). Unlike its predecessor, the IFI targets real estate assets only, and is assessed based on their net value as of January 1 each year.

 

There are two key rules:

 

·      Residents of France are taxed on their global real estate holdings.

·      Non-residents, including Chinese citizens, are taxed only on property located in France.

·      The threshold is €1.3 million, after deducting eligible debts related to those assets.

 

Are Chinese Citizens Liable for IFI ?

 

Yes. Chinese individuals who own real estate in France are subject to IFI even if they live in China.

 

Although France and China signed a bilateral tax treaty in 1984, that agreement does not exempt or override the IFI, which is a wealth tax — not an income, capital gains, or inheritance tax. Therefore, French domestic tax law applies, and IFI must be declared and paid annually if the threshold is exceeded.

 

What Property Is Included in the IFI?

 

IFI includes:

 

·      Directly owned real estate in France: apartments, houses, land

·      Rental properties or second homes (whether rented or not)

·      Shares in real estate companies such as French SCIs, or foreign companies whose assets consist mainly of French property

·      Usufruct, joint ownership, and bare ownership (nue-propriété) interests

·      Indirect ownership through offshore companies, trusts, or nominee arrangements may still trigger IFI liability, depending on how the French tax authorities classify the structure.

 

How to Reduce or Manage IFI Exposure

 

You can manage or reduce IFI exposure through several lawful strategies:

 

·      Holding property via a Société Civile Immobilière (SCI) — useful for estate and tax planning (though not exempt from IFI)

·      Dismemberment of ownership (e.g., dividing usufruct and bare ownership)

·      Valuation discounts for co-owned or rented properties

·      Deducting debts such as mortgages, property taxes, or renovation loans — if properly documented

 

Each case must be reviewed carefully with a French tax advisor experienced in foreign ownership.

 

How to File IFI from China

 

Chinese residents must file a Form 2042-IFI annually with the French tax authorities.

 

How to declare:

 

·      Online via the French government tax portal: impots.gouv.fr

·      Non-residents can create an account or file on paper if necessary

 

How to pay:

 

·      By international wire transfer through a special bank account held by your lawyer

·      By credit card via the French tax payment system

 

Filing deadlines usually fall between April and June.

 

FAQs from Chinese Investors

 

I hold my French property through a Hong Kong or BVI company. Do I still have to pay IFI?

 

→ Probably. If the structure is seen as a “transparent vehicle” by French tax law, the tax may look through to your personal ownership.

 

Can I claim protection under the China–France tax treaty?

 

→ No. The treaty doesn’t cover wealth tax. IFI applies under French domestic law.

 

Is IFI separate from rental income tax?

 

→ Yes. Rental income is subject to French income tax, while IFI is a separate annual tax based on the asset’s net value.

 

Why Professional Advice Is Essential

 

The French tax system is strict and requires detailed property valuation and disclosure.

 

Audit risks increase if foreign structures are involved.

 

Incorrect or late declarations may result in penalties and interest.

 

Work with a bilingual tax advisor (French–Chinese or French–English) who understands:

 

·      French property law

·      International structures (trusts, holding companies)

·      Your long-term goals, such as estate planning or repatriation

 

Why Professional Advice Is Essential

 

·      Risks of audit or non-disclosure

·      Cross-border compliance planning

·      Working with bilingual legal advisors

 

*               *               *               *               *

 

For over a span of 25 years, our corporation comprising of attorneys specializing in Fiscal Law has provided assistance to corporations, their executives, and people engaged in tax and financial affairs, including problems related to foreign bank accounts and offshore firms, both domestically in France and internationally.

 

Consequently, our legal professionals actively engage in all matters pertaining to corporate and tax law.

 

This enables prompt intervention in situations requiring the implementation of preventive measures.

 

The extensive history of implementing tax and legal law sector has contributed to the development of a strong reputation, as demonstrated by the frequent appearances of Mr. SASSI, a legal professional, in many respected media outlets such as L’Express, Les Échos, L’Expansion, L'Entreprise, and BFM Radio, among others.

 

Our clients comprises both domestic entities, comprising firms and persons located across several regions of France, such as Dom Tom (Martinique, Guadeloupe, Tahiti, New Caledonia, Mayotte, etc.), as well as international entities, including companies and individuals situated in regions such as Asia, the Middle East, Maghreb, and Africa.

 

Please feel free to reach out to us for any inquiries or requests for assistance pertaining to any regions of France, including the overseas territories (Dom Tom), as well as international locations.

 

Contact:

 

Mabrouk SASSI, lawyer Paris Bar

32 avenue Carnot – Paris 17th - France

infos@sassi-avocats.com

Tel 07.71.58.58.58

 

The following links may be of assistance:

 

• The General Tax Code (CGI) refers to the comprehensive set of regulations and laws that govern the taxation system within a certain jurisdiction. It encompasses the many provisions and guidelines that dictate the assessment

 

• The provided link directs to the official website of Legifrance, which is the French government

 

• The subject of discussion pertains to the doctrine of tax administration within the Ministry of Budget.

 

• The provided URL leads to the official website of the French tax administration.

 

• The provided link directs to the official website of the French tax administration, specifically to the section

 

• The Ministry of Economy and Finance is a governmental institution responsible for overseeing and managing economic and financial matters within a certain jurisdiction.