On a hot day in France
Emma – Hey honey, it’s too hot, it is getting unbearable now, let’s have a swimming pool in the backyard.
Gagan – not a bad idea darling, I was about to discuss the same, let’s calculate the expanses.
Emma – yes, hurray let’s do it, how lovely you are (kissing him)….
After 2 hours of research…..
Gagan – ok so it’s gonna cost us XXX Euro in setting up the pool and an additional YYY euros on tax…
Emma – Tax, for what ?, we have already paid for the current AY. (Emma is smart, she knows the diff between AY, FY, and PY – Emma could be an ACCA)
Gagan – yes honey, we have paid for the current AY, but having a swimming pool will increase our property tax liability …
Emma – the tax on a swimming pool …….
STOP STOP, you are reading someone’s private conversation, bad manners, let Emma and Gagan plan their swimming pool to get some relief from the scorching heat wave of Europe and we delve into the topic of Tax on swimming pools in France.
Today while going through the morning ET newspaper, a piece of news caught my attention saying “Al to Detect Swimming Pools” which discusses taxation on swimming pools in France.
Now let’s look into the matter
1. Property tax in France is based on the rental value of the property and any addition to the property like permanent (not temporary) has to be declared before tax authorities within 90 days, since property tax is based on rental value, so any improvement will increase the rental value of property resulting in increased property tax.
2. Since property tax is being paid to local municipalities, so it varies from region to region, an average 30mtr2 (3×10 – won’t you think it’s a good size for Emman & Gagan) poll adds around extra 200 euros in taxes.
3. So SMART people of France were not declaring their swimming pools to authorities to avoid the extra burden of taxes.
4. Now the tax department came up with a software (tech-savvy dept, It has nothing to do with the efficiency of the ITR portal of India) with Capgemini, a french consulting firm, that uses satellite photographs available openly, analyzes the buildings, and identifies the pool, then the data is compared with the details provided by the assessee and flags the outliers, it is further verified physically by the department officers.
1. In France there are around 67 ml people, owning some 3 ml private pools[1] this number spiked in recent years as most people were working from home. It was hard for the tax dept to see over walls and record and verify every private pool, so they decided to watch from above (We’re watching — from above…), Since Oct 2021 some 20,000 unrecorded swimming pools are recorded, and approx 10ml Euros (79 Cr) were collected as tax. As this was limited to some regions of the country, now the department is planning to go pan France with the technology to assess all the undisclosed swimming pools. Some estimates from the department say that there would be an addition of around 40ml euros (approx. 320 Cr) in total property tax revenue in 2023, because of this technology.
2. Another reason is the decline in the water resources of the country, currently, France is struggling with a drought, which left 100+ of its municipalities short of drinking water, to combat drought, even irrigation has been banned in northwest and south-east of France.
3. It won’t be wrong to say that this exercise will act as a two-edged sword, one edge will help the department to recover the tax, other sword will help the authorities to regulate the supply and usage of water by the swimming pool owners.
Does swimming pools are taxed in India also?
1. No, we have different laws on property tax, which we will discuss in some other article.
After a long discussion finally, Emma and Gagan decided to discuss this with Gagan’s mother in India, and then she told them the demerits of having a pool in the backyard…….
Now Emma and Gagan decided not to have a pool, they will enjoy under shower only, this is how Indian moms are brilliant at saving money and taxes.
Hope you know how Gagan’s mother would have convinced them.
Sources
1. French Tax Collectors Use A.I. to Spot Thousands of Undeclared Pools – The New York Times (nytimes.com) <https://www.nytimes.com/2022/08/30/world/europe/france-taxes-pools-artificial-intelligence.html#:~:text=Pools%20are%20taxed%20by%20size,are%20paid%20to%20local%20municipalities.>
2. French tax officials use AI to spot 20,000 undeclared pools | France | The Guardian <https://www.theguardian.com/world/2022/aug/29/french-tax-officials-use-ai-to-spot-20000-undeclared-pools>
3. Undeclared pools in France uncovered by AI technology – BBC News <https://www.bbc.com/news/world-europe-62717599>
[1] France’s Federation of Pool and Spa Professionals.
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