January 11, 2013
There is no general system of income taxation for individuals in French Polynesia. All individual taxpayers are liable to tax only on certain sources of income.
French Polynesia has the character of a tax-haven. Residents are treated in the same way as nonresidents for taxation purposes.
Transactions Tax (impôt sur les transactions)
Property rentals of any description are considered to be receipts and come under the Service Providers and Professionals heading of the Transactions Tax. In terms of leasing property, this tax is levied on the gross rent at the following rates:
|TAXABLE INCOME, CFP (US$)||MARGINAL TAX RATE|
|Up to 5 million (US$56,345)||2.2%|
|5 million – 11 million (US$123,960)||4.4% on band over US$56,345|
|11 million – 22 million (US$247,920)||5.5% on band over US$123,960|
|22 million – 55 million (US$619,800)||6.6% on band over US$247,920|
|55 million – 82 million (US$924,065)||8.8% on band over US$619,800|
|Over 82 million (US$924,065)||11% on all income over US$924,065|
|Source: Global Property Guide|
Special tax offsets are available for individuals tax-resident in France and investing in the French overseas departments and territories, including the Loi Girardin, which concerns new or remodeled dwellings.
Loi Girardin- for Individuals
Investors must either:
- live the property as their main home for at least five years after purchase, or
- rent out for five years after purchase, or
- invest in a company or society putting up buildings in the overseas departments and territories for rental for at least five years.
The maximum incentive is 64% of the building's cost, and can be deducted from individuals' tax payments:
- Over five years for an investment in a rental property
- Over ten years for buying one's principal home
The tax reduction is limited to CFP1,953 (US$22) per sq. m. (2005), and amounts to:
- 25% of the cost of a dwelling intended to be the buyers' home
- 40% of the cost of a dwelling intended for rent on the free market
- 50% of the cost of a dwelling intended for rent to tenants for less than certain higher limits.
- plus 10% if the dwelling is in a town
- plus 4% if the swelling is equipped with renewable energy systems
- To a maximum of 64% of the building's cost.
CAPITAL GAINS TAX (imp ôt sur les plus-values)
Capital gains earned from selling land or real property is subject to the real property capital gains tax (imp ôt sur les plus-values). The taxable gain is the selling price less acquisition costs and related expenses. The first CFP20 million (US$225,381) are exempted from tax. The applicable tax rate depends on the holding period of the property:
CAPITAL GAINS TAX
|HOLDING PERIOD||TAX RATE|
|Up to 3 years||20%|
|3 years - 5 years||10%|
|Over 5 years||nil|
|Source: Global Property Guide|
Property Tax (imôt foncier sur les propriétés bâties)
Buildings are subject to property tax at a flat rate of 10%. A deduction of 25% of the property's rental value is given to all owners, which means that the tax is effectively levied on 75% of the property's rental value.
Municipalities may levy 50% surtax on the property tax, which makes the maximum effective tax rate at 15%. New buildings benefit from 5 years' tax exemption.