Press release 16 April 2018

Arsene unveils its 6th Real Estate Tax Barometer: 2018 marks a new context

French law office Arsene, dedicated exclusively to tax issues, has released results of its 6th Real Estate Tax Barometer:

63% of respondents have a positive opinion of President Macron’s tax measures. However, only 31% of respondents are satisfied with real estate measures.
Less than half (45%) of respondents were subject to tax inspection in 2017, a slight decrease compared to 2016 (57%).
-87% of respondents experienced no changes in relationships with the tax administration compared to the previous year.
Office space is the preferred form of asset investment for 2018 (34%), ahead of warehouses (30%).
Half of respondents consider that Brexit impacted the French market and 84% consider that Brexit may have an impact in the next 12 months.
50% of respondents consider themselves affected by the amendment to the France-Luxembourg treaty that came into effect on January 1st 2017.

Arsene revealed the results from its 2018 Real Estate Tax Barometer launched during the 2018 Winter Real Estate Conference organised on a yearly basis. Main learnings are that President Macron’s tax measures (2018 Finance Law, transfer from the French Solidarity Tax on Wealth (ISF) to the Solidarity Tax on Real Estate (IFI), etc.), international treaty and convention changes, and Brexit will have a profound impact on the current tax context.

Major Trends for 2018

Trends highlighted in past barometers are confirmed this year, and tax issues are playing an increasingly key role. Tax issues are a priority in board discussions for nearly 80% of respondents. Frequent legislative and tax variations were, and remain, key concerns. Additionally, concerns regarding effective tax rates are on the rise (2.96 pts in 2018 vs. 2.76 pts in 2017 on a scale of 1 to 4), even though the corporate tax rate continues to drop.

“This year, 63% of respondents considered that tax measures implemented by President Macron and his government are satisfactory. However, in the real estate industry, 69% of real estate professionals considered that his initiatives were average to disappointing. Additionally, only 33% of real estate developers considered that tax incentive policies were satisfactory (extension of the Pinel program, exemption of real estate gains in certain areas or for public housing), proving that the real estate industry is expecting stronger initiatives on these issues,” commented François Lugand, Partner at Arsene in charge of the Real Estate Tax unit.

In this specific context, major investment trends are changing. In 2018, warehouses and office space represented 64% of preferred assets, compared to 56% in 2017. This rise means that respondents are moving away from retail space as preferred investment (16% in 2017 compared to 11% in 2018) as well as housing (28% in 2017 compared to 25% in 2018). For all respondents, the price point remains the most important factor when investing (3.45 pts on a scale from 1 to 4 where 1 is the least important and 4 is the most important factor).

Tax inspections and relationship with the tax administration

Although half of respondents (45%) stated that they were subject to a tax inspection in 2017, results show that relations with the tax administration are becoming stable after a strong drop last year (87% consider that relations have not evolved). Use of financial penalties also appears to be stable (30% in 2018 compared to 32% in 2017). Additionally, for most respondents, use of penalties remains an instrument in general litigation negotiation.



Tax Administration


Were you subject to a tax inspection…?
in 2016 / in 2017 / YES / NO


Have you noticed more frequent use of tax penalties?


What do you think of your relations with the tax administration?
87% of respondents consider that relations with the tax administration have not changed compared to last year

Results also show strong improvements in how respondents perceive the quality of interactions with the administration in advance ruling requests (82% vs. 20% in 2015). Additionally, improvements were measured in request processing (58% of respondents were satisfied by their contact person as well as Q&As), despite increasing response times (between 3 and 6 months for 83% of respondents).

For Franck Llinas, Partner at Arsene in the Real Estate unit: “Relying on advance tax rulings or tax approvals is becoming increasingly common. The process is very efficient and quick for certain types of requests, especially VAT or filing fees, but can be much longer and uncertain for international tax or restructuring situations. Despite the strong expertise at Bercy, staff changes and promotions within departments and the pool of inspectors often leads to weaker departments with poor transfer of skill and expertise.”

Directions for 2018


Impact of regulatory measures

63% of respondents considered that tax measures implemented by President Macron and his government are satisfactory

Only 31% of respondents deem real estate tax initiatives satisfactory

Only 33% of real estate developers considered that tax incentive policies were satisfactory (extension of the Pinel program, exemption of real estate gains, etc.)

Half of respondents said they were affected by the treaty reform

Half of respondents considered that Brexit had an impact on the French market

Over half of respondents have never heard of the multilateral instrument

Changes are underway for 2018 in the tax environment. Respondents highlighted the importance of international tax standards, and half of all respondents considered that they were affected by the former reform of the France-Luxembourg treaty although it was recently modified on March 20th of this year.

60% of respondents using foreign investment companies pay close attention to required substance levels and hire locally competent staff. Fewer than 10% of respondents admit to having insufficient substance.

However, major international tax overhauls underway remain confidential; over half of respondents (61%), for example, have never heard of the Multilateral Instrument (a multilateral tax agreement that supersedes bilateral agreements). 61%, however, considered that these past years saw the development of important of very important international tax standards.

On the same topic, over half of respondents considered that Brexit impact the French market and 84% believe that Brexit may have an impact in the next 12 months. On the contrary, last year, 67% of respondents said that the upcoming Brexit had no impact (yet).

“The current tax context on an international level leads to much uncertainty for companies, including real estate players. In this fast-changing context, strategies are set to evolve. Such is the case with the implementation of the OPPCI plan, for which 70% consider that it is a key instrument for investments in France in the coming months. The efficiency of these systems is criticised more this year than the last, yet they remain an advantage for those involved,” added Stéphanie Hamis, Associate at Arsene in the Real Estate unit.

Finally, the new tax treaty between France and Luxembourg will be implemented shortly and encourage investors to review their investment structure, especially for those using OPPCI.


The barometer was conducted by Arsene in the first three months of 2018 with 80 real estate professionals: developers, funds, property companies, asset managers, etc. Respondents hold the following positions: General Manager or Associate, Legal Director, Financial Director, Project Manager, Investment Director, Asset Manager and Fund Manager.


About Arsene

Arsene is the first, exclusively tax-centered independent law firm. The firm is a founding member of the Taxand International Network (50 countries, 400 partners, 2000 tax experts) and is not affiliated to an audit or legal firm.

Arsene was founded in 2004 to offer tailored services in all major fields. With 21 partner among the top 100 tax experts in Paris, Arsene advises and supports clients in tax management in an international environment.

Media contacts: Enderby

Franck Moulins – T +33 (0)1 83 64 71 79 –

Damien Piganiol – T +33 (0)1 83 64 71 77 –