New tax for Brits with French holiday homes

The new tax could hit Britons that own holiday homes in France with thousands a year.

The property tax would see the French government charge on any home that is rented out for the year. This is likely to affect as many as 200,000 Brits that own second homes in France.

When renting out a holiday home during the time when it’s not used, Brits will be charged 20 per cent of it annual rental value.

However there is a loop-hole, if the home owner rents their property out for the whole year with a local letting agent they will be exempt from the tax.

Property tax laws are being overhauled by French President Nicolas Sarkozy’s government and is expected to come into force on 1 January 2012.

This new tax will be added to the two taxes already pai by French holiday home owners; the taxe fonciere, which is paid by the house owner and the taxe d’habitation, which is paid by those who live in it.

But Government ministers have argued that second home owners should help pay for French public services, such as the maintenance of roads.

A spokesman for the French finance ministry said: ‘Being the owner of one or more second homes implies that one benefits directly or indirectly from local and national public services, like the police, legal system and national infrastructure’.

However the tax might face a legal challenge in the European Court before it becomes law, legal experts have stated that it could be viewed as discriminatory towards foreign owners of second homes and might face a legal challenge in the European Court before it becomes law.