Arsene Taxand - Real Estate

The end of the tax treaty between France and Denmark !

After Luxembourg, the tax treaty between France and Denmark should be modified soon. Indeed, the Danish government has announced on June 27 that a majority of the parties of the Danish Parliament had reached an agreement allowing the Danish minister of taxation to terminate the tax treaty between France and Denmark. The bill, which has not yet been submitted, provides for an effective date as from January 1 st, 2009 at the earliest.

Termination of the tax treaty is likely to impact existing end future investment structure which provides for the direct ownership of French real estate asset by Danish investors. It could be anticipated that a new tax treaty would allow France to tax the sale of French buildings carried out by Danish companies (Ministerial response Masson, November 25, 2004).

However, since, the effective date of application is announced as from January 1st, 2009, current investors should have sufficient time to adapt their real estate ownership structure according to the future tax constraints that will be agreed on between both countries.