Ecovis in Argentina

Uruguay’s Real Estate Market: A Growing Opportunity

In recent years, Uruguay’s real estate market has experienced significant growth driven by various factors, notably the promotion and encouragement of investments in this sector. These initiatives have provided substantial benefits not only to local and foreign investors but also to end-users seeking housing solutions.

Uruguay offers a unique legal framework through the Promoted Housing Law (Law 18.795), aimed at fostering private investment in residential construction while simultaneously facilitating broader access to housing for the population through considerable tax incentives.

Although the law has been in force since 2011, it was during the administration of President Luis Lacalle Pou that certain aspects of the legislation were further relaxed. These adjustments have led to a notable surge in investment and construction activities under the law’s benefits.

The law grants tax exemptions on income generated from promoted investments, benefiting not only investors but also final users, as it also exempts property transfer taxes. Additionally, special advantages are provided for those acquiring properties through bank financing.

As a result of these recent regulatory relaxations, it has become increasingly common to walk through the streets of Uruguay’s main cities and witness numerous construction projects, with many new buildings ready for occupancy. The rapid investment growth has not only expanded housing options for prospective buyers but has also contributed significantly to the development of previously underpopulated areas.

This expansion has alleviated congestion in the capital city by populating nearby zones and creating new “localities” equipped with essential services such as shopping centers, schools, medical facilities, and dining establishments. These developments effectively meet the needs arising from the growing population in these thriving regions.

Taxes for US expats in France: What US citizens should know about their tax obligations

For US citizens living in France or receiving income from French sources, managing their tax obligations can be complex. The Ecovis experts explain the cross-border tax rules.

The unique tax regulations and the bilateral tax treaty between France and the United States mean that expatriates and those with French income must remain vigilant to avoid compliance issues.

We focus on declarative and strategic tax services. We support you in fulfilling your tax obligations.

Nicolas Savoy, lawyer, ECOVIS CF Société d’Avocats, Paris, France

Taxation of French income

US citizens, regardless of their place of residence, are required to file a tax return with the Internal Revenue Service (IRS) in the USA. However, French tax laws impose separate obligations on income sourced in France. The France-US tax treaty outlines how income is taxed in both countries, mitigating the risk of double taxation but necessitating careful, accurate reporting.

Failing to meet these obligations can result in significant penalties and unexpected tax liabilities. Professional assistance is crucial to ensure that you adhere to all local and international tax requirements efficiently and compliantly.

For further information please contact:

Nicolas Savoy, lawyer, ECOVIS CF Société d’Avocats, Paris, France
Email: nsavoy@cf-avocats.fr

German exit tax: Investment assets now included

If a natural person who is subject to unlimited tax liability in Germany gives up his or her domestic residence or habitual abode in Germany, he or she is subject to German exit tax under the Foreign Tax Act. Under the new rules, this now also includes investment assets. The Ecovis experts explain the details.

Exit tax currently applies to taxpayers who hold at least 1% of the shares in a domestic or foreign corporation (e.g. GmbH or Limited) in their private assets. If the shareholder emigrates, German fiscal authorities presume that the shares have been sold, often resulting in a high tax burden. Since there is no liquidity from an actual sale, payment of the income tax due can be inconvenient (dry income). Exit tax also applies when residency according to Art. 4 of the OECD Model Tax Convention is transferred from Germany to another country on the basis of a double taxation agreement.

Get support from internationally experienced tax advisors if you plan to give up your residence in Germany.

Sabine Scholz, Tax consultant, ECOVIS BLB Steuerberatungsgesellschaft mbH, Munich, Germany

German exit tax expansion

The Annual Tax Act 2024 has now extended the rules for exit tax on investment units under the German Investment Tax Act. This includes, in particular, fund units or units in special investment funds.

The exit tax now also applies to investment assets if

• at least 1% of the issued investment units were held directly or indirectly within the last five years prior to the emigration, or
• at the time of emigration, the acquisition costs of the investment units held directly or indirectly in an investment fund amounted to at least EUR 500,000.

For shares in special investment funds, there is no minimum threshold for the investment participation or for the acquisition costs.

Investment funds as part of business assets are not subject to exit taxation. The new regulation applies to all departures after 31 December 2024. Losses will not be taken into account in the context of exit tax.

What those affected should consider

Individuals planning to move to Germany (possibly for a limited period of time) should be informed about the issues relating to German exit taxation. As a preventive measure, assets can, for example, (in advance) be reallocated to harmless asset classes (e.g. real estate, free float shares under 1% participation in capital).

For further information please contact:

Sabine Scholz, Tax consultant, ECOVIS BLB Steuerberatungsgesellschaft mbH, Munich, Germany
Email: Sabine.Scholz@ecovis.com