Software trained to spot undeclared swimming pools has resulted in an additional €10 million of tax revenue for the French authorities.
Okay, let’s dive in!
A machine-learning tool deployed across nine French regions during a trial in October 2021 helped authorities uncover 20,356 undeclared private pools and levy additional taxes on applicable households.
Under French law, pools must be declared part of a property’s taxable value.
As such, pools can increase the value of a property – and hike the individual tax homeowners pay.
According to Le Parisien newspaper, which first reported the news, a 30-square-metre pool is taxed at €200 (£170) a year.
Google and French consulting firm Capgemini have developed an application that uses machine learning to scan publicly available aerial images of properties for indications that a swimming pool is present.
The most obvious indication is a blue rectangle in the back garden!
After identifying the pool’s location, its address is confirmed and cross-checked against national tax and property registries.
In April 2022, The Guardian reported that the software had a 30% error rate. It would often mistake solar panels for pools or miss existing pools if they were heavily shadowed or partially covered by trees.
The French Treasury said it would expand a tool across the country that it expects will bring in around €40m (£34m) in new taxes on private pools in 2023, exceeding the £24m cost of developing and deploying the software.
The tool could eventually detect undeclared home extensions and patios that are also considered when calculating French property taxes.
“We are particularly targeting house extensions like verandas, but we have to be sure that the software can find buildings with a large footprint and not the dog kennel or the children’s playhouse,” said the deputy director general of public finances, Antoine Magnant to Le Parisien.
He added, “This is our second research stage and will also allow us to verify if a property is empty and should no longer be taxed.”
According to the Federation of Professional Builders (FPP), France has the largest market in Europe for private swimming pools, with an estimated three million in existence.
This is partly due to a boom in construction during the Covid-19 lockdowns and recent heat waves.
However, the issue has been contentious this year because of the drought in France, which has led to rivers drying up and restrictions on water usage. One MP for the French Green party has called for a ban on new private pools.
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The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
Parliament is currently discussing the draft 2023 Budget Law. Although this is yet to be approved, the draft signals a potential change to the taxation of rela estate companies in Italy. Specifically, the tax treatment of shareholdings in such companies.
Article 23 of Presidential Decree no. 917/1986 proposes new provisions regarding the ‘alienation’ of shareholdings in real estate companies by certain persons.
Specifically, the proposals relate to disposals by:
In other words, companies and entities that derive their value mainly from real estate situated within the Italian territory.
It is a provision aimed at taxing capital gains on foreign shareholdings that result, de facto, the transfer of real estate properties located in Italy.
Undoubtedly, the proposal has got its inspiration fromArticle 13, paragraph 3, of the OECD Model Tax Treaty. This is often referred to as the “land rich clause”.
The proposals could have an immediate impact on cases where the shareholder realising the capital gain:
The proposals do not apply to shares listed on a stock exchange.
Where there is a tax treaty in force, the change could apply where the tax treaty with the shareholder’s state of residence grants Italy rights of taxation in respect of capital gains on shareholdings in real estate companies.
In this respect, Italy may tax such capital gains in accordance with provisions set forth by over twenty tax treaties including the land rich clause. It is likely that the number of tax treaties that reflect this position will increase over the coming years.
If you have any queries about this article on Italy real estate companies, Italian tax matters or capital gains in general then please do not hesitate to contact us.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
Several weeks ago, we commented on the Spanish Government’s recently proposal to introduce a Solidarity Wealth Tax.
However, this article considers new wealth tax proposals – in respect of the Net Wealth Tax and the Solidarity Wealth Tax – for non-Spanish-tax-resident individuals who hold Spanish real estate through one or multiple non-Spanish-resident entities.
It is envisaged that non-Spanish-tax-resident individuals would be subject to the Net Wealth Tax (“NWT”) when they hold shares in an unlisted entity. This would be where “at least 50% of its assets are directly or indirectly made up of real estate located in Spain”.
These new proposals would replace the current domestic provisions which historically have required non-resident individuals to pay NWT in circumstances where they directly own real estate only.
Additionally, the Spanish Government plans to bring in the Solidarity Tax (“ST”) to supplement the regional NWT. The ST will be calculated and assessed at the federal level.
The ST will be levied on non-Spanish-tax-resident individuals with a net wealth in Spain of at least EUR 3 million. It should be noted that this will include any interests in non-resident entities that own Spanish real estate
The NWT can be credited against any ST liability.
It is expected that these measures will be passed before the end of 2022.
If the new legislation is published prior to the end of 2022, then both would apply to indirect holdings of Spanish real estate held on 31 December 2022.
It is currently expected that both would have to be paid in June or July of the following year.
If you have any queries about the Spanish Net Wealth Tax or Solidarity Wealth Tax, or Spanish tax matters in general, then please do get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article.
A new ruling was issued by Judge Yardena Seroussi in respect of an appeal to the Real Estate Tax Appeals Committee. The ruling concerned how luxury apartments should be taxed.
The Appeals Committee considered whether a land appreciation tax exemption should be granted to several sellers during the sale of a luxury apartment.
It was claimed by the vendors that they were entitled to the full sum of the maximum exemption for a single apartment prescribed by law.
However, the Israel Tax Authority held that the exemption applies only to sales of an entire apartment unit and not each share in a multiple ownership arrangement. Accordingly, it calculated its tax on the maximum exemption per seller—not according to their actual portion of ownership.
The owner of a single apartment is entitled to an exemption from land appreciation tax, up to the amount permitted by law.
At the moment, this amount stands at ILS 4.6 million.
It is worth noting in the case that:
The Israel Tax Authority had decided that the exemption was available in respect of the entire apartment rather than to each individual seller.
However, the Appeals Committee ruled that the exemption applied to the sale of a single apartment and therefore the exemption should be granted to each separate vendor.
This was on the basis that the sellers were not part of the same family unit
It seems quite likely the Israel Tax Authority will appeal this ruling.
If you have any queries about this Israel Real Estate Tax Appeal or Israel tax matters in general, then please do not hesitate to get in touch.
The content of this article is provided for educational and information purposes only. It is not intended, and should not be construed, as tax or legal advice. We recommend you seek formal tax and legal advice before taking, or refraining from, any action based on the contents of this article