Solidarity tax on fortune - SpeedyLook encyclopedia

History

This tax succeeded the “wealth tax” (IGF) created in 1982. Created by the Finance law for 1989, it takes again the mechanisms and the philosophy of the IGF, removed in 1987: It is a graduated income on the capital which relates to the inheritance of the natural persons (other than that of the moral persons). With the difference in other taxes on the assets (deprived of periodic nature), the STF is indebted each calendar year (like the Real estate tax for example), according to the value of the inheritance of the people concerned. It paid in 2006 3,68 billion € and ensures approximately 1,6% of the revenues from taxes of the State. The STF is added to the other taxes striking fortune: death duties, transfer tax, real estate tax…

Field of application

The STF concerns the natural persons who have an inheritance whose net amount is higher than a threshold fixed by the law (either in approximately 2007: 518000 hearths, causing a collection record for the State ). This threshold was of: 4730000 frank in 1999 and of: 720000 euros in 2003. In 2007, it was fixed at: 760000 euros (being specified that for this same year, it has been expected that the thresholds of the various sections of the scale are increased each year to take account of the monetary erosion). Only the fraction of the value of the inheritance exceeding this threshold is imposed, in order to avoid too distinct changes of situation. The plate of the STF is consisted the net amount at January 1st of the year of the whole of the goods, rights, and values belonging to the natural persons referred to above.

Concerning the valorization of the main home, following a judgment, the law recognizes however a deduction of 20%, carried in July 2007 with 30% to take account of the rise of the price of the real estate which can concern people of which the inheritance is exclusively made up of the main home (cf will infra). The Constitutional council had returned in 1998 a decision highlighting the existence of a bond necessary between tax and production of incomes by the taxed good. It does not remain about it less than the main home remains chargeable with the STF for 70% of its value.

Example: a person having an inheritance evaluated with: 778000 euros will be imposed only on: 18000 euros exceeding the threshold of: 760000, is: 99 euros by year.

For a taxpayer to which the inheritance is close to the threshold of constraint, it is advised to sign a declaration by providing the documents in proof if necessary relating to the exemption of certain goods of the taxpayer (cf will infra).

The calculation of the inheritance is carried out, as for him, according to the Household for tax purposes, without consideration of the matrimonial mode. It thus retains the elements of the inheritance pertaining to the whole of the members of the household for tax purposes, that is to say in the case of a couple all the goods belonging to one or the other of the couple. It is besides for that by provision express of the legislator the couples (including of the same sex) alive in cohabitation are compared to the married couples for the calculation of the inheritance, idem for the people having concluded a PACS.
However, the husbands married under the mode of the separation of goods and which do not live under the same roof are the subject of a separate imposition. Moreover, to avoid too easy tax assemblies, the law regards from now on the Usufruit iers as the true owners. Strategies of temporary donation and/or transfer of usufruct are thus recommended with the taxpayers not wishing to weigh down their STF.

The indebted people of the STF, which has their residence in France, are indebted STF on the elements of their inheritance whatever their localization, in France or abroad, except in the event of application of a tax Convention. For the taxpayers whose residence is abroad they are indebted STF only at a rate of the inheritance which they hold in France, and without including the financial placements there (thus a " tax quasi immobilier" for nonthe tax residents).

Taxable goods

The goods of the Household for tax purposes taken into account (real goods, goodwills, movable goods, currencies, etc) exclude those expressly exonerated in the list present in the General Tax Code.

In order to avoid some abuses (gifts of Naked-property with conservation of Usufruct), it is the usufructuary who counts in his fortune the value of the good. It is thus not possible to escape the STF by an assembly from this kind. (One can on the other hand sell in front of notary a usufruct for life or of limited time, but that does nothing but replace one real capital by a monetary capital.)

Abatements

One applies an abatement of 20% to the Main home, like with each real estate whose tenant makes his main home. In the second case, the legislator holds account indeed owing to the fact that the rent reported by this good itself will be taxed in any event. This abatement will be of 30% as from 2008 (following the vote of the Loi TEPA).

A good in Indivision is counted, in addition, for the share available to each one of its owners. The constitution of a SCI can according to the cases being advantageous or not.

A reduction of 150 € (in 2007) per dependant children is granted on the final amount of the tax.

Exonerated goods (in 2004)

goods professional (a Entreprise which one is also leading for example), under certain conditions;
objects of antiquity, Art or quite simply of collection, shares of civil society owners of such objects;
property rights arts person, artistic or industrial;
wood, Forest S or participations in forest groupings (to the amount of the three quarters of their value);
rural goods rented in the long run and participation in agricultural land groupings;
good anonymities, including those of the Treasury;
values of capitalization of the retirement pensions;
revenues received in repair of physical injury related to an accident or a disease.

Rules of determination of the chargeable net amount

The value of the goods taken into account is their net amount, to hear gross amount minus the deductible debts.

Determination of the gross amount: within the framework of the STF, it is the informant, therefore the taxpayer, who evaluates itself the value of his goods. The cgi all the same envisaged rules of evaluation to guide the informant, those vary according to the nature of the goods to declare.

Tax political tendencies

the real goods must be evaluated with their monetary value at January 1st of the year of the declaration. Monetary value meaning with the market price.

the value of the real inheritance is founded on a list of the prices to the noted square meter with Paris and in the main cities of province, if not the scales of the notaries can be used.
the main home enters the base of calculation with a rebate of 20% of the value of the building at January 1st of the year of the declaration.
a rebate can be applied to the residences rented (20 to 40%) according to various criteria (age of the occupants, assembling rent, duration of the lease).
the real goods held abroad must be declared and enter the base of calculation, except tax conventions (Denmark, Luxembourg, Egypt, Argentina, Finland, Netherlands, Czech Republic).
In the event of donation of real estate, the whole value (naked-property and Usufruct) of the good must be declared by the usufructuary.

the movable goods must be evaluated with the market price of the last day of the year which precedes the declaration

the value by the wallets of French or foreign transferable securities with dimensions, is founded over an official list of the middle prices of the thirty last meetings of the year, or last day of the year, with the choice of the taxpayer and this, value by value.
the value of the SICAV, CPF and Scpi is founded on their last known realizable value.
the plans of salary savings enter the tax base with a possible rebate.
the value of the contracts of Life insurance and goods of capitalization enter the base of calculation for the amount of their surrender value.

furniture enters the base of calculation, in the form of a contractual estimate which cannot exceed 5% of the taxable assets.

works, objets d'art and antiquities centenaries are exonerated and do not enter the base of calculation.

the professional goods do not enter, in theory, in the base of calculation.
to suppose that they are not looked like professional goods (completely exonerated), wood and Forêt S, under certain conditions, are exonerated for the three quarters of their value.

The informant can, moreover, deduct a certain number of debts known as deductible. It acts mainly:

of the bank overdrafts
of the capital remaining due (at January 1st of the year of assessment) under the loans subscribed near finance companies, being specified that the amount of the debts related with a loan subscribes with an aim of acquiring an exonerated good cannot be charged directly to the value of the chargeable inheritance (on this assumption, only the possible surplus of the remaining capital due on the value of the exonerated good can decrease the taxable amount)
of the taxes whose operative event occurred (at the latest) at January 1st of the year of assessment and who were not discharged on this date (IR, Tax of dwelling, real estate taxes), including the contribution of STF itself
of the other debts unquestionable but not discharged at January 1st of the year of assessment (real loads, invoices and fees, accounts - not yet output checks, deposits received from the tenants, fallen alimonies but not discharged, etc)
of the amount, after application of a coefficient of revalorization, certain allowances for physical injury.

the total formed by the amount of the STF due under one year and the taxes due in France and abroad at a rate of the incomes of the previous year should not exceed 85 % of the incomes of the hearth (without distinguishing according to whether the incomes taxable or are exonerated). See the rule of the levelling off below.

the STF, once paid, can be integrated in the calculation of the Tax shield which limits to 60% of its incomes the maximum imposition of a taxpayer (this mechanism being added to that of the levelling off, but using a different base of calculation).

Calculation of the tax

The rough tax is calculated according to a scale according to the chargeable net amount (VNT). The tax is based on the declaration of assets of all those which have a patrimonial fortune estimated above: 760000 euros.

Scale 2007 of the STF

Fractions of the chargeable net amount of the inheritance.

Then, it is necessary to deduce the tax cuts due to the family loads which are of 150 euros per minor with load, handicapped child whatever the age, people invalid living under the same roof.

The calculation of the tax thus answers this formula: (n% of VNT) - family loads = taxes Net to be paid

The levelling off of the STF

A levelling off was set up (later on with its setting-up) so that the total of imposition formed by the STF and the IRPP does not exceed 85 % of the income of the previous year of the taxpayer. The STF is thus reduced difference between:

on the one hand, the total of this tax and the taxes due in France and abroad under the incomes and products of the previous year;
in addition, 85 % of the total of the net incomes of professional expenses of the previous year after deduction of the only catégoriels deficits whose charge is authorized, as well as exonerated incomes of income tax carried out during the same year in France or out of France and of the products subjected to a levy at source.

This reduction is limited to 11 325 € or with 50 % of the STF (rule of the " removal of the upper limit of the plafonnement"). Only the debtors who have their domicile for tax purposes in France at January 1st can profit from the levelling off.

Table of the revenues from taxes

(*: forecasts)
The STF represents approximately 1 % of the revenues from taxes of the State in 2006. It relates to hardly 2% of the taxpayers, but with a progression of a very fast number of taxable people (the average inheritance of a French household was into 2004 of 165.000 euros).

The amount of what each year this tax reports makes it possible to have a first idea of the visible distribution of the inheritances, or in any case of the part which is taxed with it. A more precise study of these receipts shows a very important contribution of the taxable people to the title of the first section on the one hand, and those imposed in the last section, on the other hand. These two categories represent each one approximately 40% of the receipts of the STF. In 2005, according to the National union unified of the taxes, 86% of the debtors of the STF are located in the first two sections of the scale and discharged a tax of 1100 € on average.

Abroad

Controversies on the relevance of the STF

Criticisms of the STF

The STF is frequently described as “ideological tax” by its detractors and sometimes renamed “Incentive To leave France”. It meets the following oppositions:

On the bottom

the declarations of assets would be constraining, even attentatoires with the private life according to the former minister Michel Poniatowski, who considered anticonstitutional a requirement of declaration of all the residences of a private individual. Indeed, the informant is constrained to specify and evaluate, with a certain detail, the integrality of his goods. (jewels, furniture, guard wraps, etc)
the wealth taxes were abolished in several developed countries (in particular European) and are non-existent in the majority of others, which harms the attractivity of the country which practices it like activity and place of residence for the foreigners having a high inheritance. In opposite direction, that contributes at the beginning of part of fortunes and their holders towards countries with the less heavy taxation of the inheritance (Suisse, Luxembourg, Belgium…). This phenomenon of tax Expatriation concerned according to a study of the senate 649 debtors in 2005, in clear increase over the previous years (368 in 2003). Another report/ratio points the undervaluation of the figures of the tax authorities as well as the indirect losses for the French economy: “ In all the cases, the delocalizations of the debtors to the STF constitute a loss of dynamism for the French economy: young people than the average of the debtors to the STF (which is 66 years), while being tested (fork of the 45-55 years), definitely richer than the average of the debtors to the STF, these taxpayers, among whom the managers of undertaking are very numerous, have had for six years at their disposal 10 to 15 billion euros of capital which they could invest elsewhere than in France. ”. In a report on the STF, the television program Capital estimates it that a third of the French multimillionnaires is expatrient.
the STF would make dual employment with the Death taxes (which is also a tax on the inheritance), according to certain theorists of the taxation (see Impôt and inheritance)
Among the considerations which had made adopt the wealth tax was a search for incentive of the French with to make profitable their capital left in waste land: second home or tertiary sectors, or used simply a few weeks or days per annum as a foot with ground ; however, this goal which was not reached by the STF, would try, today, to be it by a new tax, the renewal fees on the vacant housings in the cities where it seems useful for the public authorities.
the level of fraud would be high : indeed it is about a declaratory tax (it is the taxpayer which must take the initiative to estimate the value of its inheritance, to calculate the amount of its tax and if he is indebted to inform the tax authorities of it). So the number of taxpayers in infringement (by ignorance of the exact value of their capital or voluntarily) would be high. In addition the difficulty in estimating the price of certain goods (real estate, jewels, furniture) opens the door with the undervaluation of the inheritance declared thus that with many conflicts with the administration.
From the point of view of its name, the STF raises the question of the forced solidarity . Can the redistribution be still called “solidarity” when it is imposed by the coercive force of the State? This question arises for all the taxes of social redistribution, but more specifically with the STF because of its name and of the justifications morals which support it.
the plate of the STF is rising estimated. The value of a real estate or a wallet of values can fluctuate in time, with the rise but also with the fall. For example, an administrative decision as regards POS can devalue by the real goods. The monetary value of such a good appears in fact only with the sale. In the event of fall of the value of his inheritance, the taxpayer will have been taxed on a virtual fortune.

On the form

the STF can be confiscatoire : indeed the capital incomes after all the taxes (returned, appreciation, CSG, CRDS, STF) and after inflation can become negative. The term of “syndrome of the Ile de Ré” was used to illustrate the situation of many taxpayers, as a farmer of the indebted Ile de Ré of the STF but which does not have the incomes making it possible to discharge some. Indeed in this case, the farmer becomes taxable because the price of the ground increased around its exploitation. In this case, the effect of the STF is to force a taxpayer to sell his good and to leave its place of residence. This particular case was limited by the adoption of the Tax shield which puts a ceiling to the tax of the taxpayer with 50 % of its incomes (the tax shield also forces to him to make the advance of the sums in question, which are refunded only the following year).
increase in the number of taxable people : if the full number of the debtors increases quickly, they for example passed from 178 899, in 1997 with 335 525 in 2004, is 87 % more in seven years (and estimated at 515 000 in 2007), the average contribution of the STF, it is in constant fall (for example -9,1 % between 1997 and 2003 according to the Senate). This rise of the number of the debtors is above all due to the fast increase in the prices of the real estate. For example in 2006, the owner of an apartment of 120 m ² in 4th, 5th, 6th, 7th, 8th, or 16th districts of indebted Paris east from now on of the STF. In this direction, the STF becomes a new tax on buildings more than one tax on fortune.
the report/ratio of the STF is regarded as weak relative at the cost of its perception, which requires the treatment of the forms sent each year by the debtors. Taking into account the other negative effects (in particular the tax Expatriation), it would have with final negative net yield. Thus, according to the economist Patrick Artus, it “would twice cost in not received what it reports. According to Christian Chavagneux, editor association of " Economiques" alternatives; , the STF involving and generating the tax expatriation has a cost of tax losses estimated at 10% of the annual revenues from taxes for the French State.”.
the financial press reproached the STF for being a tax “which them millionaires without obstructing the billionaires”: indeed, the majority of very great fortunes would use is strategies of desfiscalisation (generally by the exemption of the professional goods) or would choose the expatriation. On the other hand the more modest hearths subjected to STF (easy senior officers, pensioners, etc) do not have access to these solutions. Thus, all the billionaires residents in France listed by Forbes in 2006 are in position to profit from the exemption under professional good.
It penalizes the couples because it does not integrate any concept of share like the income tax: thus, two people having each one 500 000 € of inheritance will not pay a STF while being declared unmarried, but the simple fact of putting itself in cohabitation will be enough to make them taxable on an inheritance of 1 000 000 €. In the same way, two already taxable single people with the STF will have by marrying a taxation higher than the sum of than they paid individually before. The case of divorced cohabiting is in a No man' S Land legal.
the tax rates are fixed, whereas the outputs (rate) of the equity net of inflation did not cease dropping, returning the weight of the increasingly heavy tax.
It penalizes the business management: indeed of many old managers of undertaking are maintained at management positions with an only aim of profiting from the exemption under " goods professionnels".

Advantages of the STF

The existence of the STF is defended with the following arguments:

while eroding appreciably large accumulations of capital, STF contributes - with the death taxes and of change - to avoid that dynasties of shareholders are constituted, which not only is harmful with the republican principle of equal opportunity, but especially would neutralize part of the lifeblood of the country.
morally, to remove the STF to align itself on the other countries would amount taking part in a race with the tax dumping and with the harmonization by the bottom of the policies of redistribution of the richnesses
finally the STF is a tax whose net profit of administrative costs (and effect of the tax delocalizations) is intended to contribute positively to the public budget. It belongs to the taxes and social security deduction, and according to its promoters it concerns only fortunate people and allows a social redistribution, as its name indicates it.
its main advantage, seldom put forward, is especially related for the French tax authorities to the " traçabilité" patrimone of the French residents (" avantage" who did not exist before 1981).

Opinion of the political parties

Founded by the Socialist party, the STF finds primarily its defenders on the left and its detractors on the right in the French political world.

the majority of the elected officials UMP are opposed to this tax, or wish at least its reform. Nicolas Sarkozy wishes her maintenance but preaches installations to encourage the investment in SME. UMP has a time studied the question of exonerating the main home of this tax, which seems for certain a good compromise to prevent that modest people are subjugated there. However of many reserves, in particular on behalf of Jacques Chirac, prevented this solution from succeeding.
the Socialist party remains overall favorable to this tax which he voted and preaches his maintenance. However Michel Charasse, creator of the IGF which became the STF, declared: “ It was naive to create the STF in 1981, it was stupid to restore it in 1988. ”. Its own creator, Michel Rocard, also criticized it: “ I think that the STF was created too heavy with a restricted plate. The STF was not well created. ”
the UDF is favorable to an important reform: “ UDF is favorable to a debate clearly assumed on the STF, which one knows and the relevance of the principle and the perverse effects of his application”. Francois Bayrou stated to want to replace it by a tax “atlight rate” on all the inheritances of at least 750 000 euros to avoid the tax Expatriation.
the Radical left party is in favor of a “ great tax personal and progressive, substituted for IR, the CSG, the national insurance contributions and the STF ”
the National front is for the exemption of the main home. The National front sees there also a cause of the " brain drains " and a " tax confiscatoire " , detrimental according to him with the competitiveness of the economy.
the French Communist party wishes to double and to triple beyond the second slices the rate of this tax.
the Communist revolutionary league is in favor of an increase in the STF.

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