9 juin 2008 French Tax on Real Estate

2 Speaker Christophe Le Bon International Tax Partner TAJ (Deloitte member firm) Paris My main message Taxes on real estate have to be taken care of in any real estate investment in France. The overall tax burden is comparable to those of other countries. The French tax system offers to foreigners, including Kuwait investors, various opportunities to mitigate such burden. It is always a matter of planning.

3 1 2 Main Features of the French tax system French Tax Treatment of Real Estate Transactions Specificities for Kuwaiti Investors 3

4 Main Features of the French tax system

5 Main features of the French Tax System (1) Taxation of income Individual non-EU resident: up to 40% (33 1/3 % on capital gains) Companies: 33 1/3% / 34.43% Indirect Tax / Transfer Tax VAT: 19.6% Transfer tax: 5.09% (asset), 5% (share of PropCo)

6 Main features of the French Tax System (2) Local Tax Territorial taxes on Real Estate Tax on added value Tax on Real Estate Wealth tax (for individuals): from 0.55% to 1.8% 3% tax (for companies)

7 Specificities for Kuwaiti Investors

8 Taxation in France of capital gain on French real estate and shares in French real estate companies Withholding tax exemption on dividend and interest repatriated from France to Kuwait Wealth tax exemption if other investment of similar amounts made in shares of EU listed companies and/or instruments issued by EU States

9 French Tax Treatment of Real Estate Transactions

10 French Tax Treatment of Real Estate Transactions SellerPurchaser (*) Asset Deal Capital gain: - company 33.33% / 34.43% - individual 16% (1/3 if not EU resident) - Transfer tax: 5.09% (+ ancillary fee / costs) or VAT - Step up in basis Share Deal Capital gain: - company 33.33% / 34.43% (or exemption depending on residency) - individual 16% (1/3 if not EU resident) - Transfer tax: 5% (or fixed fee if operating company) - No step up in basis (*) Except for real estate dealers

11 Q&A