France REITs

How to Invest in REITs in France

There are three primary ways to invest in France REITs:

1. Purchase shares of companies directly on the Paris Stock Exchange using a broker.
2. Purchase shares of ETFs that hold France real estate companies.
3. Buy into a fund (hedge fund) that invests in real estate.

How are France REIT Dividends Taxed at the Shareholder?

In France dividends received by unit holders from REITs are taxed as regular income at the individual unit holder’s marginal tax rate however if from a “qualifying company” can receive a tax credit. The tax credit for dividends in France refers to a credit that can be claimed by shareholders to offset the amount of withholding tax paid on dividends received from REITs. The credit is equal to the amount of withholding tax paid, effectively reducing the overall tax rate on dividends received.

There is no limit on the amount of the tax credit that can be claimed for dividends received from REITs in France. Shareholders can claim the full amount of the withholding tax paid as a credit, which effectively reduces the overall tax rate on dividends to zero.

Let’s say a French resident shareholder receives €10,000 in dividends from a REIT. The dividends are subject to a 30% withholding tax, so €3,000 is withheld and paid to the French government.

The shareholder can claim a tax credit equal to the amount of withholding tax paid, so in this case, the shareholder can claim a tax credit of €3,000. This credit can be used to offset French taxes that the shareholder may owe, such as the personal income tax or social security contributions.

So, if the shareholder is subject to a total of €3,000 in French taxes, the tax credit would offset the entire amount, effectively reducing the overall tax rate on the dividends to 0%.

There is no limit on the credit however it only applies to the dividends paid by a qualifying company.

In France for a REIT to be considered a “qualifying company” and eligible for the imputation credit system it must meet the following conditions:

1. It must be a resident company for tax purposes.
2. It must be widely held, meaning that no one person or group of associated persons owns more than 50% of the voting rights or equity in the company.
3. It must have paid at least 90% of its taxable income in the form of dividends in the relevant tax year.

It’s important to note that not all REITs meet these criteria and therefore not all dividends paid by REITs may be eligible for the imputation credit system.

It is important to check with the REIT and consult a tax professional

REIT ETFs in France

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