ALLEGIANCE TO THE FLAG

 

"I pledge allegiance to the flag of the United States of America, and to the republic for which it stands, one nation under God, indivisible, with liberty and justice for all." During the years I lived in the USA, I saw firsthand the fervent patriotism of the American people. Normally Elementary School students stand to recite the pledge. By the time they reach high school, all students know it by heart.

All over the world, people express their nationalistic pride in the most diverse ways, and some of them are more outspoken than others. The American pledge is easy to learn and American citizens readily express their nationalistic feelings, as I first discovered while traveling from coast to coast riding Greyhound during the summers of 1980 and 1981, long before immigrating as a Green Card holder.

The French have always been very suspicious of people who express their pride in being French, but this must not be interpreted as a lack of patriotism. Some recent events have shown how sensitive this issue is in France. This time, questions of patriotism did not come to the fore due to a soccer game played the French team; for once, French nationality was at the core of the debate.

 

PROBLEMS ISSUING THE MAY 2010 COLUMN ON APRIL 30th
I apologize for the lateness of the previous column. Normally, the column goes out the last day of the month, barring last-minute technical problems. Shortly after I sent the previous issue on April 30th, I realized the server was blocking transmission of the email. For some reason the account was not working. I was not able to unblock the account and finally send the May issue until Monday morning, May 3rd. In the end, my Internet provider admitted the error was on their end, as they had had a mix-up with my billing.

 

DOES BEING BORN FRENCH MEAN ONE IS FRENCH ENOUGH?
THE BITTER POLEMIC ABOUT DIFFICULTIES
GETTING A FRENCH PASSPORT OR ID CARD
For nearly three years, there has been a polemic that has ended up being widely covered in the media. Several pieces of a puzzle have suddenly fit together for the worse and created a nightmare: some French people who were born French could not get their ID card and/or passport renewed because they could not prove they were French enough. To an American, this statement may sound totally absurd, since the USA never questions American citizenship once it is granted or acknowledged. This is especially true for people who were born American.

My own story illustrates quite well the problems that started to appear about two and a half years ago. As many of you know, I was born French in France of one French parent. My mother was born Danish and moved to France after marrying. My father was born French in France of one French parent; his mother was born Spanish. In 1995 I started the paperwork to get my American wife French nationality, putting together the documents on a list issued by the authorities.

However, for me, the normal documents were not enough. To make a long and painful story short, the officials wanted the birth certificates of my French-born grandfather and his parents, as well as their marriage license. This was very complicated: the documents were difficult to get, mainly because I am not a genealogist and therefore I do not know where these great-grandparents were born, married and died. I asked if my French military papers would satisfy their demands, as I graduated from the Coëtquidan division of the French military academy called Saint-Cyr and was in those days an Army reserve officer. One can hardly imagine how condescending the civil servant was, answering that my rank meant nothing and that serving in the Army in those conditions did not prove that I was French enough. While I might have fooled the academy and the French army, he made clear, I was not going to fool him.

Words cannot describe the pain and anger I felt, being negated that much and that deeply. They had robbed me of a good part of my identity, although I had never been overly patriotic. I had thought until then that I had served my country and that it was the right thing to do; I had never questioned my allegiance to my country in relation to my citizenship. Even though I felt like half of Europe met through me, that was never a reason to feel any less French once I became an adult.

I left the man's office, and this project was put on the back burner for years. Nevertheless, out of rage or for revenge, I filed a petition to have my French citizenship ascertained through the Tribunal d'Instance, the French small claims court. It did not cancel the crazy requirements but at least the court decree would clarify the situation if necessary. I got a positive decision rather quickly, which soothed the pain, if only a little.

When biometric passports and the new high-tech ID card, the Carte Nationale d'Identité (C.N.I), were introduced, the French administration thought it would be a good idea to thoroughly check each request for them, in case any errors had been errors made. When Nicolas Sarkozy became president, the screening became even stricter. To sum up: anyone who was born French outside of France, including those born in what were then French colonies, as well the French children of naturalized parents, were asked to provide documents that were nearly impossible to obtain. People with my profile also had increasing problems.

This crazy process picked up momentum as more and more French people had documents expire and could not get them renewed. Then Anne Sinclair got caught up in the mess. One of the best-known female journalists in France, she is also the wife of former Finance Minister Dominique Strauss-Kahn, now managing director of the International Monetary Fund. Her position drew French media to this scandal in such a way that in a few months the interior minister admitted that the requirements were outrageous and degrading. The Figaro newspaper published Sinclair's testimony on January 22nd, 2010, and on March 3rd new guidelines were issued.

There has been nothing in the media since then. Judging by what I hear from my network, the scrutiny remains, but at a reasonable level. The key difference is that when renewing an existing passport or C.N.I., you no longer need to present your birth certificate or marriage license. Those are only needed if the document was lost or stolen, or you are requesting it for the first time.

The tightening of legislation or procedures to ensure that nobody can cheat the system is in itself a good thing. Such measures always have tremendous popular support because people want to feel safe. The American founding fathers in their wisdom created a system of checks and balances to make sure that citizens were protected from government interference by unalterable rights. After 9/11, new laws and policies increased the scrutiny of anyone entering the country, as well as its citizens, in the name of improved security. These measures led to nightmarish situations for numerous legal immigrants, candidates for American citizenship, and many others. For such people, the new laws and policies decreased their security, often leaving them close to powerless against the administration. This aspect of American policy has been mentioned in the American media and throughout the world. It is pretty clear now that France has just as bad a track record, but fewer people know about it.

For further information, see these official websites:

French passport:
http://www.interieur.gouv.fr/sections/a_votre_service/vos_demrches/passeport-biometrique

Carte Nationale d'Identité C.N.I.:
www.interieur.gouv.fr/sections/a_votre_service/vos_demarches/carte-nationale-d-identite

 

 

 

MS FRANCES GENDLIN'S LATEST BOOK - Paris, Moi, and the Gang: A Memoir... of Sorts
The author Frances Gendlin is mostly known for her guidebooks of several cities, including one about Paris. She became my client over ten years ago when she was working on the second edition of the Paris guide. She later moved to Paris, and more recently has moved back to the American continent. Her new book is a lot more personal than the guides; as the title indicates, it is a mix of memories of Paris and some fiction.

Here is how she describes it in a recent interview: "It's a mixture of fact and fiction about my life here. A lot of what happens in the book actually did happen, one way or another. But some of it is just what easily could have happened to any of us – this 'gang' of friends who are composites of real people I've known, but with a little stretching of reality thrown in. So, it's written in the style of a memoir, but I can't really call it that. In French, it would be called a faux mémoire."

Ms Gendlin is one of those foreigners who moved abroad to start the "second" part of their life. Whether you move when you are in your early 30s or closer to your 60th birthday, it makes little difference to the process, the adventure and the outcome. I am not talking about people who retire in a foreign country, although moving abroad at any age is always a struggle at first. One might wonder, "How is moving to a foreign country alone different from changing careers, or getting a divorce?" That is a good question, since any radical change in one's life necessitates a paradigm shift. It's hard for me to explain exactly what makes moving alone to a foreign country uniquely traumatic, but the experiences I have witnessed indicate that it is always a trauma, no matter how much people have wanted to do so or how successful they are at "blooming where they are planted." The fact that the trauma results from a conscious decision is not enough to explain its unique character.

I admire Ms. Gendlin resilience and strength as a woman as much as her qualities as an author. In the interview she maintains that she is not too young to have written her memoirs; well, a gentleman should not comment about a lady's age.

> http://www.laurelzuckerman.com/2010/03/interview-with-frances-gendlin-on-paris-moi-and-the-gang-a-memoir-of-sorts.html

 

 

 

A CHANGE IN MY SCHEDULE REGARDING MY PRACTICE
As I am getting more and more involved with the maintenance of my website and hoping to have a better management of my column posted on it, I have decided to take a course on Web design in June and July so I can improve my control over all aspects of the site. I have absolutely no intention of changing careers; rather, I often refer to my column as my baby and I continue to have a very personal relationship with it. I learned HTML on my own in order to design the issues of my column myself, but my jeantaquet.com website is almost three years old. I want to go to the next step but I cannot do it efficiently enough by myself.

Therefore, I will not be as available as usual during this time, but I will make an extra effort to ensure that my clients get their normal quality of service. It will be much easier to reach me by email (qa@jeantaquet.com) than by phone; that has been the case for years, but it will be especially true during these two months.

 

 

OFFICE CLOSED FOR SUMMER VACATION
Summertime is coming up and my office will be closed from the evening of Friday July 16th until 9am on Monday August 30th. As always, I will still be reachable by email for emergencies and important matters. The service I offer of receiving mail for clients will continue while the office is closed. In due time, I will let individual clients know how to receive or retrieve their mail during this period.

 

 

Best regards,

 

 

Q & A

THE TAX CONSEQUENCES REGARDING THE 3% PENALTY AND THE CAPITAL GAIN REGARDING AN SCI

QUESTION
I am American currently living in South America. I created an SCI when I bought my apartment in Paris. My life has changed, and the ownership of the shares in the company accordingly. This arrangement has served me well through out the changes of my life. In order to fill out the annual CERFA form I need the value of the property so where do you get a reasonable property valuation for tax purposes?

Also, how many years do I have to own the Paris property to be exempt from the French capital gains tax? As an American and a non-EEC resident/national, I thought it was about 15 years.

ANSWER
The first question is fairly simple. S.C.I. stands for société civile immobilière – a French company dedicated to owning French real estate. This type of ownership by foreign residents, through a French or foreign corporation, entails an annual tax of 3% of the market value of the property unless the company declares the full identity of the shareholders every year and there is a tax treaty between France and the shareholders' country of residence.

Therefore, the tax office expects the declaration to mention the true market value. This is less straightforward than it might seem, since it is rare for different experts to reach exactly the same amount. And if the French tax office decides the market value you declared is too low, you will be seen as evading taxation amounting to 3% of the difference between your declared value and the tax office's valuation.

For a standard apartment or house, one can easily get a good idea of the market value by asking the real-estate agent, checking the classifieds to determine the average per square meter for the area, and asking the notaire what the database of recent sales reveals. But for a piece of real estate outside the norm, such as an individual house inside Paris proper, an apartment with a private garden, or one with a roof terrace the size of the apartment, the valuation cannot simply be calculated as size times the average price per square meter for the street. In most such cases, the market value will fall somewhere between the size of the living space and the size of the whole property, but in some really exceptional situations the market price may be even more than that based on total size. How would one price a fenced property with a garden and a driveway inside the city limits of Paris, for example? I am sure that people with sufficient net worth would put a significant sticker price on that.

If the property is relatively standard, a self-made valuation based on the criteria above should be fine and the risk very small. As the tax rate is 3%, the tax owed because of a discrepancy of 30,000 euros, for example, would be 900 euros. But any discrepancy on a standard property is unlikely to be of that magnitude; a valuation based on the abovementioned figures would likely be much more on target than that. For a property totally out of the norm, however, it is best to get a valuation by a sworn professional, whose costs typically start at 500 euros. The main reason for hiring a professional is that they will guarantee their valuation, including paying the tax owed if the tax office decides you have declared an insufficient value and consequently fines you for not having paid enough tax. In the end, however, a professional valuation is really only needed if there are taxes to pay. If there are none, then a valuation is less critical since it would have no financial consequences.

Capital gains taxation is rather complex. To simplify: this tax is owed when one sells real estate within the first fifteen years of ownership, with the ratio of taxation decreasing as the years of ownership increase. After fifteen years, no capital gains tax is owed. This applies whether the owner is an individual or a corporation. The "gains" being taxed are the difference between the purchase cost and the selling price, which is something to bear in mind if you mean to carry out major renovation after you buy the property.

There is generally no capital gains tax on the sale of one's primary residence. But this exemption does not work if you own the property through a corporation.

 

 

 

THE DIFFERENCE IN PARIS BETWEEN A B&B AND A SHORT-TERM RENTAL

QUESTION
Thank you for your May newsletter about the endorsement of the B&B industry by the Paris City Hall. This has of course stirred up quite a lot of interest and questions/doubts.
1. We understand from the Hôtes website that almost anyone can join that group/model. While there are some options (serving or not serving breakfast, for example), is it absolutely necessary for the B&B to be in somebody's home? Does one need to live in one section of the rented apartment all the time?
2. Do you see any way for our current activity to work within the framework/model they propose?
I have learned that the city would not put together such a major campaign, going after owners doing short-term rental, if the only action owners had to take to get off the hook is to register with the B&B authority. There must be something more. Can you explain?

ANSWER
This is the key question, since traditionally a B&B allows one to stay in someone else's home and share some basic things like one or two meals and some of the living space. This is the most definitive difference between a B&B and a short-term rental. That being said, both have appealing features and there should be room for each of them.

I have incorporated in English the answers found on the website so that you can get your questions answered and have a better understanding of the official requirements.

Who can be a B&B host?
Anyone can be a host, provided that it is done at his/her primary residence and at least one independent and comfortable room is dedicated for this activity.

How can one get endorsed by the Paris City Hall and benefit from the label Hôtes Qualité Paris?
You must contact one of the organizations approved by City Hall, and sign up with them. Then they will send a professional to visit and make sure your guest bedroom complies with the guidelines.

Can I be independent?
Yes, but you must be registered with City Hall under the latest version of the tourism ordinance, Articles 324-3, 4 and 5 of April 2006, which gives the legal definition of the B&B (called "chambres d'hôtes" in French) as: "Furnished bedrooms located inside a lodging dedicated to welcoming tourists who pay for one or more nights and the related services." In French: "Chambres meublées situées chez l'habitant en vue d'accueillir des touristes, à titre onéreux, pour une ou plusieurs nuitées, assorties de prestations".

You can download the registration form here: "Formulaire de declaration à la Mairie".
A copy of the relevant regulation may be found here: "décret du 3 août 2007".

 

Can I be a B&B host if I am myself a renter?
Yes, you can, if the lease does not explicitly forbid it. In any case, it is highly advisable to inform the landlord, who in return will check the by-laws of the co-ownership to make sure that there is no provision against this activity. Of course, if you rent in a low-income housing project, in French (H.L.M.) then it is completely forbidden.

What is the main difference between B&B and short-term rental?
Welcoming the guests! In this case, the host meets the guest, who stays in his home and sometimes joins him for meals. Guests in a short-term rental almost never meet the host.

Am I taxed on this rental income?
Yes. It should be reported on form 2042 C, and you will get an automatic deduction of 71% of the money received from this activity.

Should I purchase more insurance?
You may not need to, but on the other hand you must inform your insurance company of this new activity and the company will add a rider on the policy for it, often without increasing your premium.

 

Now, I would like to answer your questions myself.

Is it absolutely necessary for this to be inside somebody's home?
Yes. The guidelines quoted above make it very clear not only that it must happen in somebody's home but also that the home must be their primary residence; to be completely clear, the website points to the legal and fiscal definition of a primary domicile. An American resident owning an apartment who would like to get into the B&B activity would have to declare that he or she is a French fiscal resident, which would have to be linked to being a legal immigrant, i.e., holding a valid carte de séjour.

Do you see any way for our current activity to work within this framework/model they propose?
Again, the answer is clear: as the first and foremost requirement is to be a fiscal resident of France and live in the apartment, it is totally unrealistic to consider filling out the form and registering on the chance that no one will follow up. It would take about five minutes for anyone to discover the scam – calling the tax office will do it!

I would like to add a personal comment about this entire situation. I have witnessed the rise of the short-term rental industry in Paris. At first, I saw mostly American and British citizens trying their best to please their clients and manage the apartments well. Their set-ups were not always perfectly legal, nor did they often have a nice office to run their business out of, but most of them were good people and behaved professionally. Then came the second and third generations as the market grew and it became popular to stay in a private home. Foreigners also saw that this was an easy way to purchase an apartment in Paris as well as making a decent income.

The ruthless reaction of City Hall, in my opinion, is due to the scandalous way too many players in this industry have managed their affairs. I would call them crooks. What makes me sad is that there are several good professionals who are losing a good business because the French authorities cannot easily distinguish the good from the bad. I am not convinced that the Parisian authorities have made the best decision, but I do not blame them for having put a stop to a despicable way of doing business. In other words, if one wants to blame someone for the situation and is tempted to blame the French and their cumbersome, inefficient and ruthless administration, think again: they are just trying to protect the public from the sharks.

Useful contacts:
Mairie de Paris (City Hall)
www.paris.frand 39 75 (Paris Info Mairie)

Ile-de-France region
DECV/STL, Tourism sector secretariat
0 803 818 000 (0.15 euros per minute)
www.pidf.com or www.iledefrance.fr

Direction Générale de la Consommation, de la Concurrence et de la Répression des Fraudes (DGCCRF)
www.dgccrf.bercy.gouv.fr

Centre de documentation et d'information sur l'assurance (CDIA)
www.cdia.fr

Impôts Service
0820 32 42 52 and www.impots.gouv.fr

Information Services Publics
39-39 and www.service-public.fr