The ISF is a tax that applies only to people whose heritage, on 1 January of Civil current exceeds a certain threshold. Unlike land tax or property tax, calculated automatically by the tax authorities, the wealth tax is a tax based on the reporting system.
It is up to taxpayers affected by the ISF to declare the amount of their assets after making an estimate of the market value of their property.
Those whose heritage is between 1.3 and 2.57 million may declare their ISF with their income, postponing the amount of their assets on their tax returns within the limits of the legal deadline for declaration.
Those whose assets exceed 2.57 million euros, are required to sign a declaration of specific ISF. The closing date of this statement is attached to Wednesday 15 June 2016. The reporting delays generate penalties which eventually adds default interest.
On 1 January 2016 the wealth tax threshold is set at 1.3 million euros. All taxpayers whose assets exceed the threshold of 1.3 million euros are subject to ISF.A note that all property held by the tax household is taken into account to calculate the value of heritage. This means that even property dependent children of the taxpayer are taken into account in the calculation of the ISF.
The amount of the gross wealth tax is based on the scale above.
A discount applies to assets between 1.3 and 1.4 million.
The discount applies as follows: € 17,500 - 1.25% of the taxable net worth.
For a taxable net worth of 1.37 million at 1 January 2016, the calculation of the discount is:
€ 17 500 - (€ 1.37 million x 1.25%) = 375 €
Hence ISF amount to be paid = gross ISF (see above) - discount.
Either € 2,990 - € 375 = € 2,615.
Note that tax cuts may be granted to the taxpayer under certain expenses incurred, such as investment in SMEs, and come lessen the amount of wealth tax liability. (You want to invest for the development of the OHM Group, write us at email@example.com).
The ISF is also capped.
As income tax, wealth tax is calculated on a sliding scale. This scale consists of slices of net taxable value and a tax rate for each tranche.
In 2016, that scale is divided as follows:
- Up to 800 000 euros of net taxable value: 0%
- Between 0.8 and 1.3 million included in net taxable value: 0.5%
- Between 1.3 and 2.57 million included in net taxable value: 0.7%
- Between 2.57 and 5 million included in net taxable value: 1%
- Between 5 and 10 million euros of net taxable value included: 1.25%
- Beyond 10 million euros of net taxable value: 1.5%.
Example calculation of gross TFR for 1.37 million euros of net taxable value:
Up to € 800,000: € 0
From € 800,000 to € 1.3 million (1.3 to 0.8) x 0.50% = € 500,000 x 0.5% = € 2,500
From 1.3 to 1,370,000 € (1.37 to 1.3) x 0.70% = € 70,000 x 0.70% = 490 €
On the gross TFR = € 2,500 + € 490 = € 2,990
The ISF is capped so that the cumulative amount of the taxpayer's taxes does not exceed 75% of its revenues. Specifically, in 2016, the amount of wealth tax added to the amount of 2016 income tax in 2015 may not exceed 75% of the income received during 2015.
ISF & primary residence
The residence is part of the heritage subject to the ISF. This however is subject to a 30% reduction on its value at 1 January of the year concerned by the declaration.