You bought the stone farmhouse outside Sarlat in 2017 on the advice that holding it through your UK limited company would keep things simple. The purchase went through smoothly, the local taxe foncière arrives every autumn and you pay it without thinking, and for years nothing else came from the French tax office. Then one spring a letter arrives, or your French accountant calls with an apology: France wants 3 per cent of the market value of the house, every single year, simply because a company rather than a person owns it. On a house worth 480,000 euros that is 14,400 euros a year, before any income tax, before any capital gains tax on a future sale, and it cannot even be deducted from your other French taxes. Since Brexit the worry has grown sharper, because the United Kingdom is no longer a member state of the European Union and many British owners fear the bill has become unavoidable.
This guide explains the French annual 3 per cent tax, known in France as the taxe de 3 % sur la valeur vénale or TVVI, as it applies to British owners holding French property through a UK company or a trust after Brexit. It sets out which structures the tax catches, how the bill is calculated, why the 2008 France-United Kingdom double tax convention keeps the exemption door open despite Brexit, how form 2746-SD filed before 15 May removes the charge, and how to challenge a bill that is wrong. Every decisive rule below is linked to its official source so your adviser can verify each point.
I. My French House Sits in a UK Company: Does France Tax It Every Year After Brexit and How Much?
A. Which British owners does the 3% tax catch: companies, trusts and chains of ownership?
French tax law starts from the bricks, not from the passport of the owner. Article 990 D of the General Tax Code provides: “Les entités juridiques : personnes morales, organismes, fiducies ou institutions comparables qui, directement ou par entité interposée, possèdent un ou plusieurs immeubles situés en France ou sont titulaires de droits réels portant sur ces biens sont redevables d’une taxe annuelle égale à 3 % de la valeur vénale de ces immeubles ou droits.” In ordinary language, any legal entity, meaning any personne morale such as a company, any organism, any fiducie which is the French word for a trust arrangement, or any comparable institution, which owns French buildings directly or through an intermediate entity, or which holds rights in rem over such property, owes an annual tax of 3 per cent of the open market value of those buildings or rights. A UK limited company that owns a Dordogne farmhouse directly is caught. A British family whose French villa is owned by one UK company that is itself owned by another company is caught as well, because the statute looks through the whole chain.
The look-through rule is deliberately wide. Article 990 D deems to own French property through an intermediate entity “toute entité juridique qui détient une participation, quelles qu’en soient la forme et la quotité, dans une personne morale, un organisme, une fiducie ou une institution comparable”, which means any legal entity holding a shareholding of whatever form and whatever size in a company, organism, trust or comparable institution. There is no minimum percentage and no limit on the number of intermediate layers: one share in a chain that ends at a French house is enough to bring the structure within the scope of the tax. The question is then never whether the tax applies in principle, but whether an exemption removes it, and Article 990 G of the same code adds a warning that shapes every calculation: “La taxe prévue à l’article 990 D n’est pas déductible pour l’assiette de l’impôt sur le revenu ou de l’impôt sur les sociétés.” The 3 per cent is never deductible against income tax or corporation tax, so it is a dry cost that must be removed by exemption rather than absorbed.
Trusts deserve special attention because so many British families hold French property through a family trust with a corporate trustee in London, Jersey or Guernsey. The Conseil d’État, the supreme administrative court, ruled on 9 May 2019 in decisions nos 426431 and 426434 on claims brought by Amicorp Limited for the Stigell Family Trust against the tax administration’s published comments, references BOI-PAT-TPC-10-10 and BOI-PAT-TPC-20-20. The court held: “qu’un trust, défini comme un ensemble de relations juridiques créées dans le droit d’un Etat autre que la France, doit être présumé, au sens et pour l’application du 3° de l’article 990 E du code général des impôts, avoir son siège dans l’Etat ou le territoire selon le droit duquel ont été créées les relations juridiques qui l’ont institué.” A trust is therefore presumed to be established in the state whose law created it, which decides which exemption door it must walk through. The same ruling protects trustees who can prove a different reality, since the doctrine “ne saurait faire, par principe, obstacle à ce qu’une entité qui revendiquerait le bénéfice de l’exonération prévue par le 3° de l’article 990 E du code général des impôts” … “puisse en apporter la preuve et renverser ainsi la présomption de rattachement à l’Etat ou au territoire correspondant à la loi à laquelle elle est soumise.” The presumption can be rebutted with evidence. The claims were otherwise dismissed: “Article 1er : Les requêtes de la société Amicorp Limited sont rejetées.” Read the full ruling here: Conseil d’État, 9 May 2019, nos 426431 and 426434. If your French house sits in a trust rather than a company, our analysis of British residents with a UK trust in France completes this picture on declarations and succession.
Three further boundaries matter before any calculation. Entities whose French property represents less than half of their French assets are outside the logic of a property tax, as are companies whose shares are genuinely and regularly traded on a regulated market. Property dealers and developers are spared for the buildings properly recorded in their trading stock, since Article 990 F of the General Tax Code provides that the tax is due “à l’exception des biens régulièrement inscrits dans les stocks des personnes morales qui exercent la profession de marchand de biens ou de promoteur-constructeur.” And where a chain of companies stands between the family and the house, the same article places the debt on the company nearest the bricks and makes every intermediate entity “solidairement responsable du paiement de cette taxe”, jointly liable for payment, so dissolving the top company never makes the bill disappear. Families weighing a French SCI, the French property company examined in our guide to the British family SCI for a French house, should compare that vehicle against the UK company under exactly these rules.
B. How is the 3% bill worked out on 1 January and what does the treaty change?
The calculation itself is brutally simple, which is why the exemptions carry all the weight. The valeur vénale is the open market value, what an arm’s length buyer would pay for the property on the open market, assessed each year on 1 January: Article 990 F states that “La taxe est due à raison des immeubles ou droits immobiliers possédés au 1er janvier de l’année d’imposition”. The rate is then 3 per cent of that value, as the tax administration’s official TVVI page explains in its overview of articles 990 D to 990 G. A house worth 300,000 euros on 1 January produces a 9,000 euro bill for that year. A Paris flat worth 900,000 euros produces 27,000 euros. Mortgages are not deducted, rental yield is irrelevant, and whether the house was occupied, empty or let makes no difference to the base. If you dispute the figure later, the whole fight will turn on valuation evidence such as a reasoned opinion from a notaire, the regulated French conveyancing lawyer, or recent sales of comparable houses nearby, so keep that evidence from the start.
Brexit did not create this tax, but it changed the background against which British structures are judged. The old version of the law reserved the exemption for companies established in France and was condemned by the Court of Justice of the European Union in Elisa, judgment of the Fourth Chamber of 11 October 2007, case C-451/05, about Luxembourg 1929 holding companies. The Court ruled that the free movement of capital precluded the old French law, which exempted France-based companies while giving companies from other member states no way to supply evidence identifying their individual shareholders. The ruling is CJEU, Fourth Chamber, 11 October 2007, case C-451/05 Elisa, language of the case French. France rewrote the exemption around disclosure instead of nationality: any structure that reveals its owners pays nothing, whatever its flag. That redesign is what saves British companies today.
The current exemption for treaty-state entities is what matters for a UK company. Article 990 E of the General Tax Code opens the disclosure exemption to legal entities having their seat in France, in a European Union member state, or in a country or territory that has signed with France a convention of administrative assistance against fraud and tax evasion, or in a state that has signed with France a treaty giving them the same treatment as entities seated in France. The United Kingdom is no longer in the European Union, but it is covered by the second door: the 2008 France-United Kingdom double taxation convention, published by the British government as the in-force treaty, contains a full exchange of information article. Article 27 of the 2008 convention organises a broad exchange of foreseeably relevant information for applying the treaty and domestic tax laws, aimed expressly at preventing fraud and supporting anti-avoidance administration. That clause is exactly the kind of administrative assistance the French statute requires, so a UK company that discloses its shareholders stands on the same footing as a French one.
Two de minimis thresholds can also remove small cases entirely, whatever the seat of the entity: Article 990 E excludes holdings whose share “est inférieure à 100 000 € ou à 5 % de la valeur vénale”, so a small fractional interest or a modest studio may owe nothing at all. Larger holdings must use the disclosure doors, and the choice between them is practical. The full door, paragraph d of Article 990 E, requires declaring every shareholder above 1 per cent with identity, address and number of rights held. The fallback door, paragraph e, accepts a partial declaration limited to the shareholders the company actually knows, with the exemption then granted proportionally for the declared part of the capital measured on 1 January. Declare half the capital transparently and half the tax disappears; hide everything and the full 3 per cent stays due. The same property will also generate the ordinary local bills examined in our guide to the 2026 taxe foncière bill for British owners, which are separate taxes with their own reliefs.
II. My UK Company Has Received a French 3% Tax Bill: How Do I File Form 2746 and Challenge an Error?
A. How do I file form 2746-SD before 15 May and secure the exemption?
The exemption is never automatic: it must be claimed each year through a specific return. The statute is blunt. Article 990 F states that liable entities “doivent déclarer au plus tard le 15 mai de chaque année la situation, la consistance et la valeur des immeubles et droits immobiliers en cause.” Every year, by 15 May at the latest, the company must declare the location, description and value of the buildings and rights concerned. The same article adds: “Cette déclaration, accompagnée du paiement de la taxe, est déposée au lieu fixé par arrêté du ministre chargé du budget.” The return comes with the payment, at the office designated by ministerial order, which in practice means the dedicated online TVVI procedure. Since the 2017 amending finance law, e-filing of form 2746-SD is compulsory, a procedure the administration opened on 1 April 2021 for tax due on property held from 1 January 2021. Paper habits from before Brexit no longer work: the declaration is electronic, annual and due on 15 May.
The administration’s guidance confirms the rhythm in plain terms: the exemption applies when entities file return 2746 voluntarily each year by 15 May at the latest. The official form page is here: form 2746-SD on impots.gouv.fr. Spontaneously is the key word: a disclosure offered voluntarily with the May return opens the exemption, while the same information produced for the first time during an audit does not repair the missed deadline. Companies that already file French corporate returns, numbers 2038 or 2072, are dispensed from filing a separate 2746 because the information is already in the administration’s hands, but a UK company with no French establishment and no French corporate filing has no such shelter and must file the 2746 itself.
In practice, treat 15 May as the most important date in your French property calendar. First, confirm the value declared: the market value on 1 January, supported by a written valuation, recent comparable sales or the notaire’s opinion obtained when the property was bought or refinanced. Second, identify every shareholder, partner or member holding more than 1 per cent of the shares, units or other rights, with full identity, address and number of rights, going up the chain through any intermediate companies until you reach the individuals. Nominee arrangements and corporate directors do not stop the inquiry: the statute asks who holds the rights “à quelque titre que ce soit”, under whatever title, and the treaty authorises the exchange of exactly this ownership information. Third, file the 2746-SD online and pay any residual tax with the return, keeping the filing receipt. If only part of the capital can be documented, file anyway for the known part and claim the pro-rata relief rather than abandoning the whole exemption. And if the company sells the house, warn the notaire early: the statute makes the article 244 bis A representative liable for the remaining tax where the seller sits outside the European Union and European Economic Area treaty circle, so the sale file must address the 3 per cent position before the acte de vente, the final notarised deed of sale, is signed.
One calendar trap catches British owners who also live in France. The 15 May deadline for the company’s 2746 is independent of your personal French income tax return and of the company’s UK filing deadlines at Companies House and HM Revenue and Customs. Missing the French date while being perfectly compliant in London still leaves the full 3 per cent due in France. Diary the French deadline separately, instruct whoever holds the company’s books to assemble the shareholder list in April, and never assume that the UK accountant’s timetable covers the French obligation. Where the same family also faces death duties on the French house, our guide to British heirs, French inheritance tax and the treaty explains the separate declaration and six-to-twelve-month deadlines that apply on death.
B. How do I challenge a wrong 3% assessment without missing the deadline?
Start by reading the assessment the way the administration wrote it. The three errors that recur in British files are a wrong owner, a wrong value and a wrongly refused exemption. A wrong owner arises where the house was transferred out of the company, for example into personal names or into an SCI, before 1 January of the tax year, yet the bill still names the company. Because the tax is due on buildings owned on 1 January, the land registry extract and the transfer deed dated before that date end the debate. A wrong value arises where the administration has inflated the valeur vénale: answer with your own valuation evidence, comparable sales of similar houses in the same commune, the price agreed on a recent genuine offer, or the notaire’s written opinion, and explain precisely why each comparable used against you is different. A wrongly refused exemption arises where the 2746 was filed on time and complete but the relief was denied, or where a small holding below the thresholds was taxed in full. Match each line of the assessment against the statute before writing anything: procedure first, figures second.
The challenge always begins with a written claim to the tax office, never directly with the court. Article L 190 of the Tax Procedure Book defines claims that belong to the contentious jurisdiction as those seeking “soit la réparation d’erreurs commises dans l’assiette ou le calcul des impositions, soit le bénéfice d’un droit résultant d’une disposition législative ou réglementaire”, either correction of errors in the base or calculation of the tax, or the benefit of a right granted by statute or regulation. A 3 per cent dispute fits both branches: the value is a base error and the disclosure exemption is a statutory right. File the réclamation, the formal administrative claim, with the office shown on the notice, set out the facts, attach the 1 January valuation, the filed 2746 with its receipt, the shareholder evidence and the treaty references, and ask expressly for full discharge or for the pro-rata reduction. Keep proof of sending and of every enclosure, because the file you build now becomes the court file later.
The deadline is strict and it destroys late claims however strong they are. Article R*196-1 of the Tax Procedure Book requires that claims “doivent être présentées à l’administration au plus tard le 31 décembre de la deuxième année suivant celle, selon le cas : a) De la mise en recouvrement du rôle ou de la notification d’un avis de mise en recouvrement”. For a 3 per cent bill notified in 2026, the claim must reach the administration by 31 December 2028. Do not wait for the outcome of an informal phone call, do not wait until the UK accounts are finalised, and do not confuse this deadline with the 15 May filing date: one is the yearly disclosure rhythm, the other is the two-year guillotine for disputes. If the administration rejects the claim expressly or stays silent, the dispute moves to court, and here the 3 per cent follows the registration-duty track: Article L 199 of the Tax Procedure Book states that for registration duties and assimilated taxes “le tribunal compétent est le tribunal judiciaire”, the competent court is the judicial court, ruling at first instance. This is consistent with the recovery rule in Article 990 F itself: “La taxe est recouvrée selon les règles et sous les sanctions et garanties applicables aux droits d’enregistrement.” Late payment therefore draws the sanctions and guarantees of the registration-duty regime, and the judge who reviews the assessment is the judicial judge, not the administrative one.
Two strategic points close the file. First, never let a second year accrue while the first is disputed: file the next 2746 correctly and on time even while challenging the earlier bill, so each year is protected independently and the dispute stays limited to the year genuinely in issue. Second, align the French position with the British one: the UK company must still meet its Companies House and corporation tax duties in London on the same property, and the shareholders who are revealed on the French 2746 must be consistent with the persons declared in Britain, because the treaty now organises the exchange of exactly this information between the two administrations. A coherent file on both sides of the Channel is both a legal duty and the cheapest form of protection. Handled in this order, verify the owner on 1 January, evidence the value, file the disclosure by 15 May, claim in writing before 31 December of the second following year, and the 3 per cent becomes what the rewritten law intended it to be: a transparency tax that a transparent British owner does not pay.
Conclusion
A British owner whose French house sits in a UK company or trust faces three layers of French law that fit together in a fixed order. First, Article 990 D taxes every legal entity owning French bricks at 3 per cent of market value on 1 January, looking through chains of whatever size and making intermediate companies jointly liable, while Article 990 G refuses any deduction of the charge against other taxes. Second, the exemption system rebuilt after the Elisa judgment replaces nationality with transparency: the 2008 France-United Kingdom convention and its exchange of information article keep British structures eligible, the small-holding thresholds protect modest interests, and the annual 2746-SD disclosure before 15 May removes the tax in full or pro rata for everything transparently declared. Third, the procedure enforcing these layers is unforgiving on time: an electronic return with payment each May, a written administrative claim before 31 December of the second following year, and review by the judicial court under registration-duty recovery rules. Value the house honestly, disclose the owners completely, diary May and December separately, and challenge errors in writing with the exact statutory basis. Handled in that order, a British-held French house costs its owners the local taxes every French owner pays, and not one euro more of 3 per cent.
Need a quick opinion on your case.
A telephone consultation within 48 hours with an avocat of the firm to review your company structure, your 2746 filing and your deadline before the 15 May or dispute time limit expires. Call +33 6 46 60 58 22 or write via our contact page. The firm advises British owners on French property tax from its Paris office, throughout France.