Reference: Paris Court of Appeal, Division 5 – Chamber 6, judgment of 11 May 2023, No. 22/18.304
1. The Legal Framework for Property Financing for Non-Residents
The acquisition of real estate in France by a non-resident (foreign national, expatriate, EU or non-EU national) is subject to specific rules. French banks generally require:
- A minimum personal contribution of 20% to 30% of the purchase price;
- Evidence of stable income (employment contract, tax assessment from the country of residence);
- A bank account domiciled in France or an agreement between foreign banks;
- A mortgage or surety guarantee.
Although legitimate, these conditions may conceal discriminatory practices prohibited by Article L. 312-1 of the Monetary and Financial Code and Article 225-1 of the Criminal Code (discrimination based on origin or nationality).
2. Judgment 22-18.304: A Major Jurisprudential Advance
In this case, a non-European national, tax resident abroad, was refused a mortgage loan by a French bank on the grounds that he did not provide proof of "tax residence in France". The Paris Court of Appeal held that this refusal was discriminatory, as the condition of tax residence was neither objectively justified by a legitimate interest (risk of default) nor proportionate.
2.1. The Grounds for the Refusal in Question
The bank invoked Article L. 313-1 of the Consumer Code (obligation to assess solvency) and Article 4 of the Charter of Fundamental Rights of the EU (principle of non-discrimination). However, the Court found that the mere absence of tax residence in France was insufficient to establish an increased risk, given that the borrower provided sufficient guarantees (40% contribution, stable income, property located in France).
2.2. The Classification as Indirect Discrimination
The Court applied the concept of indirect discrimination (CJEU, Case C-83/14, CHEZ Razpredelenie Bulgaria): a seemingly neutral condition (tax residence) particularly disadvantages non-residents without objective justification. It ordered the bank to pay €50,000 in damages.
3. Available Remedies for Non-Residents Victims of Refusal
In the event of a loan refusal, several avenues are available:
- Complaint to the banking ombudsman (Art. L. 316-1 of the Monetary and Financial Code);
- Referral to the Defender of Rights (discrimination);
- Legal action for discrimination (Art. 225-2 of the Criminal Code) and civil liability (Art. 1240 of the Civil Code).
Judgment 22-18.304 strengthens protection: the burden of proof is eased for the victim (the bank must demonstrate that its condition is justified).
4. Taxation and Private International Law: Pitfalls to Avoid
Beyond financing, the non-resident must anticipate:
- Taxation of rental income (General Tax Code, Arts. 164 B and 244 bis A): withholding tax or option for the progressive scale;
- International tax treaties (to avoid double taxation);
- Inheritance law (Art. 750 ter of the General Tax Code): non-residents may benefit from reduced allowances.
Advice from a lawyer in private international law is essential to structure the acquisition (SCI, split ownership, etc.).
5. How Maître Zakine Can Assist You
As a lawyer specialising in property and land law, I offer:
- A personalised analysis of your file (solvency, risk of discrimination);
- Negotiation with banks to obtain suitable financing;
- Drafting of protective contractual clauses;
- Legal representation in the event of an abusive refusal.
Expertise in private international law and taxation of non-residents (bilateral treaties, optimisation).
6. Conclusion
Judgment 22-18.304 is a victory for non-residents. It serves as a reminder that banks cannot impose disproportionate conditions. Before acquiring property in France, consult a lawyer to secure your financing and assert your rights.
