3 minTaxation of woodland assets: purchasing woodland (part 1 of 3)
Bernard Goffaux & Anne-Gaëlle Van Walleghem Investing in a sustainable way in order to preserve nature and biodiversity while also leaving open the possibility of attractive returns: that is the intention of many investors. But before embarking on the acquisition of a woodland property, it is worth taking a look at the tax rules that apply to woodland assets held in France and Belgium.
The information contained within this article is aimed at Belgian residents.
Find out in our brief about the tax rules that apply to Belgian residents who own woodland:
- In Belgium with Bernard Goffaux, Head of Estate Planning and Tax
- In France with Anne-Gaëlle Van Walleghem, tax expert.
What is the fiscal cost of acquiring a woodland estate?
Bernard Goffaux: Acquiring woodland will give rise to the collection of ordinary sales duties, calculated at a rate of 12.5%, on the price agreed for the sale of the both the land and standing timber. This price may not be less than the market value.
Anne-Gaëlle Van Walleghem: In France, such an acquisition shall be subject to sales duties at a rate of 5.80% in the vast majority of departments, aside from Indre and Morbihan (5.09%). Sales duties apply to the agreed price, unless the tax authorities substitute it for the market value if they consider that to be higher.
What about holding woodland through a forestry group?
B.G: The forestry group (or “groupement forestier”) is a form of structure for holding woodland assets that was established under the terms of the law on forestry groups of 6 May 1999. Its aim is to stem the fragmentation of woodland properties and enable coordinated forest management while maintaining an advantageous tax setup for woodland owners.
In short, the value of a forestry group lies in the fact that you benefit from the advantages of setting up a company while retaining the tax regime applicable to individuals. In other words, this means that the forestry group will benefit from a tax transparency regime, whereby all income generated by the woodland will be taxed directly in the hands of the group's members as if they were receiving the income themselves. This tax is therefore levied under the same conditions as those mentioned above.
The same applies to gift and inheritance tax, since the value of shares and units in a forestry group is exempt from gift and inheritance tax insofar as it relates to standing trees growing in woods and forests.
A-G.VW: France also encourages the creation of forestry groups as a way of improving resource management by making them subject to income tax rules in principle. To achieve this objective, a number of favourable schemes have been introduced. These range from exemption from all capital duty on the incorporation or increase in capital of the group, to the application of a fixed duty of €125 on the sale of shares, through to the benefit of the preferential regimes provided for in relation to the IFI (“Impôt sur la Fortune Immobilière” – Real Estate Wealth Tax) and transfers, enabling tax to be limited to just ¼ of their value.
Our specialists will be happy to answer any questions you may have regarding tax and assets.
