French government abandoned second home tax proposal

British nationals may be more inclined to transfer money abroad and purchase a holiday home in France following news that a tax proposal has been dropped.

President Nicolas Sarkozy and budget minister Francois Baroin agreed to omit the plan to impose a new tax on holiday homes owned by non-French residents.

The government had originally considered charging expatriates additional fees on their properties, which had alarmed those who owned properties in the country.

Under the proposal, people who own a second home in France - but are not nationals and do not rent it out - would be required to pay a 20 per cent levy on their property.

However, the 360,000 individuals who may have been affected by the move are sure to be pleased to hear that the government has dropped the plans.

The u-turn by the ruling party came after senators representing French expatriates reacted angrily to the announcement.

Many Brits were expected to be affected by the proposed move, with experts concerned that a significant number would decide to sell up.

Meanwhile, others looking to send money abroad and invest in a second property may have been put off buying in France.

In an interview with the Financial Times, tax specialist with Sykes Anderson David Anderson said: "The French government introduced this tax in order to help finance the reduction in wealth tax.

"However, it is clear that it had not thought about the implications of this new tax on overseas French nationals."

Prior to the announcement that the government would not be pushing forward with the proposal, chief executive of Assetz International Stuart Law explained the levy would add around €300 (£266) a year to outgoings.

He added that this expense would be likely to add increasing pressure on the finances of those who own second homes in the country.

Posted by Jennifer Wilkinson

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