St. Barths Online

News

Jul 17, 2005

Real Estate Investments in St. Barthelemy and the Future

space
Real Estate on the Island of St. Barthelemy has been a strong magnet for those persons wishing to find a peaceful, unhurried and safe place to retreat over the years.

There has been a sharp rise in demand for properties by potential buyers over the past few years. The rapidly increasing demand for real estate coupled with a restrained number of permits issued and the decline in real estate inventory have resulted in real estate being extremely prized as an investment on the island of Saint Barthelemy.

The island of Saint Barthelemy expects to receive the final approval of its special "Statute" by year's end and with that empowerment act in hand, will be in a position to assume much of its political, regulatory and fiscal responsibility independently of Guadeloupe, to date its administrative head. St. Barthelemy will not be independent but will answer directly to France as an overseas Collectivity. It is also true that a much greater autonomy is to be enjoyed by the island as a result of a convention agreement with France.

Regardless of the existence of Saint Barthelemy as an Overseas Collectivity of France and local laws and regulatory statutes, the future Collectivity of Saint Barthelemy will remain French, subject to the French Constitution, part of the European Union and subject to the International Treaties of France. This Article will explore the Protocol signed between the United States and France in December 2004 and although to date not yet ratified by the United States so as to be applicable, will have significant consequences, should the same be ratified.

As is generally the case between sovereign nations, France and the United States have entered into a number of Treaties, one of which was the "Convention for the avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Estates, Inheritances and Gifts" signed in Washington on November 24, 1978. Pursuant to the 1978 Treaty, the shares of corporations holding real estate are deemed personal as opposed to real property and taxed in the country of residence of the shareholder. Pursuant to the treaty, gifts of corporate shares have not been subject to the imposition of a gift tax in France by residents of the United States, and the inheritance taxes in the event of death of a shareholder have not collected in France, the probate proceedings occurring solely in the country of residence, either through the probate of a last Will and Testament, or Intestate, if the decedent passed without the benefit of a Last Will and Testament. If physical persons hold the real estate, the same has always and will remain, viewed as real estate imposable for tax purposes, in the first instance, in the country in which the real estate is located.

On a practical basis, the same has to date meant that when Americans own real property through a "Societe Civil Immobiliere" (SCI), they were free to gift the shares of the real estate corporation to their children, spouse or other, without tax incidence in Saint Barthelemy (subject of course, only to the US Gift Tax legislation and applicable). The shares held in a corporation holding real estate are freely transferable by gift in France without the imposition of a Gift Tax in that the same has to date NOT been considered real property pursuant to the terms of the Treaty and its addendums.

Relating to the transfer of shares by inheritance when a corporation holds real estate, to date the same has also been viewed as a disposition of personal as opposed to real property in that again, the shares of the SCI have to date been viewed as personal property and hence subject to the tax regulations at death of the country of residence at the time of death, either through Will or Intestate.

The above interpretations are potentially subject to change at any moment. In fact, on December 8, 2004, there as signed by France and the United States "Protocol Amending the Convention Between the United States of America and The French Republic For the Avoidance of Double Taxation and The Prevention of Fiscal Evasion With Respect to Taxes on Estates, Inheritances and Gifts, Signed at Washington on November 4, 1978".

ARTICLE III, modifying Article 5 of the Convention, provides as follows:

Real property may be taxed by a Contracting State if such property is situated in that State

The term "real property" shall in any case include property accessory to real property.

The term "real property" shall also include shares, participations and other rights in a company or legal person the assets of which consist, directly or through one or more other companies or legal entities, at least 50% of real property situated in one of the Contracting States or of rights pertaining to such property. These shares, participations and other rights shall be deemed to be situated in the Contracting State in which the real property is situated.

In a nutshell, the above Protocol, if ratified by the two contracting States, will result in all persons holding property on the island of Saint Barthelemy being subject to inheritance taxes in France, unless the real property held in France results in less than 50% of the real property held by the SCI (the SCI holds property elsewhere in the world for more than 50%).

If in fact viewed as real estate as opposed to shares for gift and inheritance tax purposes, the applicable tax law would be that of the country in which the real estate is located as opposed to that of the residence of the shareholders. Essentially, a very important distinction has been made between the nature of corporate shares as personal property, disposed of pursuant to intervivos gift or by death, be it intestate or with a Final Will and Testament, and the view of corporate shares holding real estate considered real property.

If in fact ratified, the effect will be that the first country of Taxation for American residents holding real estate through an SCI will be France in the event of a Gift or Inheritance, with the appropriate credits applied thereafter in the United States, the country of residents.

It is important to note that other advantages associated with an SCI, in particular the partially limited liability of the shareholders and the ability to gift, bequeath and devise the corporate shares without regard to forced heirship provisions of French law do not appear modified at this time. The incidence is that as to Gift and Inheritance Taxes, the ownership of non-residents through an SCI of real estate in St. Barthelemy may in the future be treated as if held in one's personal name- that is subject to the laws of the country in which the corporate real estate, if greater than 50% of worldwide holdings, is situated. At the time of the submission of this Article, the same is not as yet applicable.

Although this Article examines the potential impact of ownership through an SCI of real estate in Saint Barthelemy by United States residents, it does not examine other portions of the Treaty and in particular the provisions and implications of the ownership of real property in the United States of French residents.

If the Treaty is ratified, an in depth analysis will be the subject of a future article.
Chantal Decombe-Greaux


[Jun 27, 2013] Kay Quattrocchi is passionate about the Universe

Interview with Kay Quattrocchi by Panos Charitos Kay Quattrocchi is an artist passioned about the Universe and inspired by the latest discoveries unveiling some of its secrets. For Kay “Learning, discovering and opening our minds to other dimensions than those imposed by our five senses” is a so...

[May 31, 2013] World's 100 best beaches

CNN ranked Saline Beach N°5. Is it possible to rank the world's best beaches? Of course it is. This is the Internet. Will everyone agree with their ranking, murmuring respectfully among themselves about how perfectly accurate every placement is? Maybe not. This is the Internet. But that's why they...

[May 18, 2013] Dream races at Les Voiles de St Barth 2013

Performance and a friendly atmosphere. For four years now, the Voiles de Saint-Barth has stuck with its simple philosophy of offering high class performance and a friendly atmosphere in the magnificent setting of the islands of Saint-Barth and has attracted increasing numbers from the yachting frat...

[Mar 27, 2013] J.crew catalog in St Barts

Preppy chic fashion finds an exotic backdrop on the island of St. Barths. If you've opened your mailbox in the last week you've probably seen the latest j.crew catalog with a cover photo featuring the famous Eden Rock hotel ...well, the floating dock at least! The world class crew found inspiration...

[Dec 18, 2012] Victoria Secret Angels heat up St Barts

Candice Swanepoel, Erin Heatherton, Maryna Linchuk, Alessandra Ambrosio The worlds sexiest angels hit the beaches of St Barths for a smoldering Victoria Secret photo shoot. The crystal clear Caribbean sea was the perfect compliment to the flawless curves of these stunning super models. Splashing ar...

[Dec 17, 2012] Kate Moss flaunts her famous figure in St Barts

Kate Moss on Gouverneur beach Kate Moss was the perfect ornament for the stunning Gouverneur beach on st. Barths. The iconic super model joined famed fashion photographer Patrick Demarchelier for a glamorous photo shoot on one of the islands most pristine beaches. Still stunning at age 38 the Br...

[Sep 10, 2012] Rhony and the last hurrah on Island!

Last day in St. Barths. Aviva just couldn't give it up! Good thing they were able to escape for a classic St barths lunch at the nearly untouched Le Tamarin. Carole is shocked that the restaurant has not changed in 20 years! The traditional beauty of St. barths is well and alive at this eclectic ge...

[Sep 3, 2012] The Real Housewives of NYC more fierce than hurricane Issac!

RHONY continue to sizzle on the island of St barths. Come one come all...Looks like Sonja is going to get some action of her own tonight! LuAnn's not the only one who can speak the language of love...and all is fair on this sexy tropical paradise. Villa Dunes is turning into quite the love shack...

[Aug 29, 2012] Rhony and The Isle Of french Men

Fabulous, Sexy, live in the moment place! The Real Housewives Of New York all agree St. Barths is a "fabulous, sexy, live in the moment place". The fun begins with an exhilerating flight and safe landing at Gustav III airport in St. Jean, thanks to the expert pilots at Winair. Little did they kn...

[Aug 27, 2012] St Barts here Rhony come!

St Barths here they come! The RHONY start their primping for the luxury island trip to St barths! Ramona and Sonja get their "quick fix" of beauty treatments...LuAnn shops for bikinis it's like...well ... "something you want to do alone..." Will Avivas fear of small planes stop her from making the ...

[Jun 11, 2012] Where RHONY stayed in St. Barts?

Take a tour of the exclusive villa. Live like the Real Housewives of New York! St. Barths Online takes you inside the Dunes luxury villa where the girls stayed on their glamorous trip to the Island of St. Barths. The 16,000 sq ft Villa Dunes offers the ultimate in luxury. Heated pools, tropical ...

[May 22, 2012] Real Housewives Of New York

RHONY live it up on the Island of St Barts! Yachts, private villas, pristine beaches, barely-there bikinis and plenty of Pinot Grigio...the Real Housewives of New York (RHONY) hit St. Barts in style. Veteran housewives Ramona Singer, Sonja Morgan and Luann De Lesseps (The Countess) join new cast ...

[Apr 10, 2012] Beyonce and Jay-Z spend Easter in St. Barts

Beyonce and Jay-Z have taken their daughter on her first vacation. The couple, who celebrated their fourth wedding anniversary last week, have been enjoying the sunshine on the Caribbean island of St. Barts with three-month-old Blue Ivy over the weekend, and took the tot for a day trip on a yacht. ...

[Apr 2, 2012] Les voiles de Saint-Barth 2012

Kick-off Les Voiles de Saint Barth 2012 Caribbean regatta in the magical French West Indies sailing paradise! Today the pres­ti­gious and top-class Caribbean sail­ing regatta Les Voiles de St. Barth 2012 with Gaas­tra Sports­wear as the offi­cial part­ner starts: At the third edi­tion run...

[Mar 31, 2012] The Ambiance of St Barths Bucket 2012

Inside the Bucket. This video features the 2012 St Barths Bucket Regatta and music by the Evan Goodrow Band. Special thanks to the entire crew of the Rebecca, Baz Bar, St Barths Online and the guys from the Evan Goodrow Band for putting on a fantastic show. The song from the Evan Goodrow Band is c...

[Mar 27, 2012] Bucket Regatta 2012: SY Rebecca

On board with Rebecca. The best event in St Barths took place on March 24 - 27, 2012. This video features the beautiful 141 ft sailing yacht, The Rebecca. produced by Real Media Travel for St. Barths Online and Baz Bar St Barth.

[Mar 14, 2012] Sir Paul McCartney and Nancy Shevell in holidays

The age old saying of "I need a holiday to get over my holiday" actually seems applicable if you happen to be Paul McCartney. The Beatle took wife Nancy Shevell on a romantic break to the Caribbean island of St Barts, just days after the pair visited Paris. Last week, the lovebirds showed support ...

[Jan 19, 2012] Chris Hemsworth - Elsa Pataky - Matt Damon

On the day their pregnancy news was announced, Thor star Chris Hemsworth, 28, and Elsa Pataky, 35, were seen in sunny St. Barts, France on Wednesday (January 18). The Fast Five actress looked lovely in blue, sporting her beautiful baby bump. Chris Hemsworth and Elsa Pataky Chris and Elsa - w...

[Jan 3, 2012] Tamara Mellon on the beach

She might be 44, but Tamara Mellon still boasts a figure that women half her age would be proud of. The Jimmy Choo co-founder showed off her toned figure in a sexy animal-print bikini as she hit the beach with her daughter in St Barts yesterday. The skimpy string two-piece highlighted Tamara's env...

[Jan 2, 2012] Gary Lineker and his wife

With almost every other celebrity couple enjoying the New Year in exotic locations, Gary and Danielle Lineker weren't going to be any different. The married couple were spotted enjoying a romantic walk along a beach in St Barts today - and looked very much in love. Gary, 51 and his wife, 32, had o...


Search the Site


Powerful advertising

Expand your advertising power with the #1 in St. Barths.

Learn more »


 
Official Sponsors