Sunday, April 21, 2013

Having confidence in your French 'notaire'

Recently on one of the popular French property discussion forums, a contributor stated that 'it would not surprise me if some French notaires told a foreign seller that capital gains tax was due on the sale and pocketed the money htemselves' - a statement for which no evidence was produced!

The discussion arose following a question about capital gains tax, which is applied to the sale of second homes in France which are not the owner's principal or main home. Whether a property is the owner's principal or second hime is relatively easy to established, and proof of the former is normally provided by annual tax returns, utility bills etc and other signs of continuous residence. Part of the Notaire's role is to ensure that any taxes due to the state are collected and paid over.

Clearly the Notaire has a great deal of power and responsibility in this situation, and as a result his/her role is highly circumscribed by legilsation and subjhect to unannounced annual checks by independent, external authorities. Monies collected are lodged in a special non-interesting bearing account in a French state-owned bank, and subject to continual scrutiny. Notaires are grouped under local Chambres de Notaires, who have considerable powers of control over their members. Many firms have been established for decades, and one of the ones I use is now run by the grand-children of its original founder and has been in business for over 50 years.

It might be useful to mention in passing that French estate agents are also highly controlled, licensed by the local Prefecture and also subject to unannounced checks by the police. Most belong to one of the professinal bodies FNAIM or SNPI who also exercise considerable control over their members.