The solidarity tax on wealth
is an annual direct wealth tax
A wealth tax is generally conceived of as a levy based on the aggregate value of all household holdings actually accumulated as purchasing power stock , including owner-occupied housing; cash, bank deposits, money funds, and savings in insurance and pension plans; investment in real estate and...
on those in France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
having assets in excess of €800,000, (increased in 2011) . It was one of the Socialist Party
The Socialist Party is a social-democratic political party in France and the largest party of the French centre-left. It is one of the two major contemporary political parties in France, along with the center-right Union for a Popular Movement...
's 1981 electoral program's measures, 110 Propositions for France
110 Propositions for France was the name of the Socialist Party's program for the 1981 presidential election during which the Socialist Party's candidate, François Mitterrand, was elected by 51.76% of the people...
. The ISF was abolished in 1986 by Jacques Chirac
Jacques René Chirac is a French politician who served as President of France from 1995 to 2007. He previously served as Prime Minister of France from 1974 to 1976 and from 1986 to 1988 , and as Mayor of Paris from 1977 to 1995.After completing his studies of the DEA's degree at the...
's right-wing government, but re-established in 1988 after François Mitterrand
François Maurice Adrien Marie Mitterrand was the 21st President of the French Republic and ex officio Co-Prince of Andorra, serving from 1981 until 1995. He is the longest-serving President of France and, as leader of the Socialist Party, the only figure from the left so far elected President...
The calculation applies to tax declarers, meaning that it can apply to a grouping of two individuals: married couples, cohabiting couples, or couples with a PACS
In France, a pacte civil de solidarité commonly known as a PACS /paks/ , is a form of civil union between two adults for organising their joint life. It brings rights and responsibilities, but less so than marriage...
. All global assets are taken into account for French residents; for others, the tax is based on assets that reside in France, with the exception of financial ones.
ISF is controversial; critics claim it drives away wealthy individuals from the country, resulting in financial loss. A report by a senator estimated that 843 people left France in 2006 because of the tax, resulting in a net loss of €2.8 billion.
In principle all assets are taken into account except for the following:
- professional goods such as enterprises (depending on the percentage owned),
- vintage (more than one century old) and collection objects,
- artistic, literature, or industrial rights,
- woods and participation in forestry plantations (for 75% of their value),
- anonymous bonds,
- capital value of pensions and retirement plans,
- income obtained as compensation for physical injury in accidents or due to illness.
ISF brought in €4.42 billion in 2007, 19% more than in 2006. It constitutes 1.5% of France's total tax receipts.
Half of all households who pay ISF make an annual contribution of less than €2,000.
Rules to fix the net taxable value
ISF is levied on what remains of the gross value after subtracting deductible debts. The gross value is determined by the declarer following certain rules. For example, the value of the principal home is reduced by 20%, as is done for some rental income. Certain real estate properties in countries with a fiscal convention such as Denmark
Denmark is a Scandinavian country in Northern Europe. The countries of Denmark and Greenland, as well as the Faroe Islands, constitute the Kingdom of Denmark . It is the southernmost of the Nordic countries, southwest of Sweden and south of Norway, and bordered to the south by Germany. Denmark...
Luxembourg , officially the Grand Duchy of Luxembourg , is a landlocked country in western Europe, bordered by Belgium, France, and Germany. It has two principal regions: the Oesling in the North as part of the Ardennes massif, and the Gutland in the south...
Egypt , officially the Arab Republic of Egypt, Arabic: , is a country mainly in North Africa, with the Sinai Peninsula forming a land bridge in Southwest Asia. Egypt is thus a transcontinental country, and a major power in Africa, the Mediterranean Basin, the Middle East and the Muslim world...
Finland , officially the Republic of Finland, is a Nordic country situated in the Fennoscandian region of Northern Europe. It is bordered by Sweden in the west, Norway in the north and Russia in the east, while Estonia lies to its south across the Gulf of Finland.Around 5.4 million people reside...
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
, and Czech Republic
The Czech Republic is a landlocked country in Central Europe. The country is bordered by Poland to the northeast, Slovakia to the east, Austria to the south, and Germany to the west and northwest....
are excluded. The furniture in the home cannot exceed 5% of the total value of the other goods.
Following President Nicolas Sarkozy
Nicolas Sarkozy is the 23rd and current President of the French Republic and ex officio Co-Prince of Andorra. He assumed the office on 16 May 2007 after defeating the Socialist Party candidate Ségolène Royal 10 days earlier....
's tax law of 2007, ISF was adjusted so that the sum of all taxes due in France would not exceed 50% of the annual revenues.
| Less than
|| 0 %
|| €800,000 - 1.31 million
|| 0.55 %
|| €1.31 - 2.57 million
|| 0.75 %
|| €2.57 - 4.04 million
|| 1.00 %
|| €4.04 - 7.71 million
|| 1.30 %
|| €7.71 - 16.79 million
|| 1.65 %
|| €16.79 million
|| 1.80 %
After calculation, a deduction is granted for minors or any disabled persons living in the same household.
The tax must be declared by residents of France by June 15; by other EU residents who own French property valued in excess of the threshold by July 15, and by other people by August 31.