Wine Industry Property Groupings

Asset diversification
Tax optimisation for wealth tax (ISF) and inheritance
Management delegated to a professional

viticole-en

GFV: A tripartite relationship

  • Investors
  • Winegrowers
  • Manager

Our approach

Select independent vineyards within great wine-making regions, on well-known terroirs.

Give preference to tenant operators, experts in their trade, developing a true distribution strategy

Wine Industry Property Groupings

An investor Wine Industry Property Grouping (GFV) is a non-operating agricultural property grouping which is invested in wine-growing.

It brings together 3 actors over the long term: Investors, Wine-growers, Manager.

A limited number of investors (maximum 149) subscribing to the capital of a non-trading company.

The sole purpose of the grouping is to invest in wine-making assets and to let them to a winegrower under a long lease.

All direct entitlements are prohibited.

The winegrower is the farmer who works the land. The company enters into a long lease with the winegrower to develop the holding in a sustainable manner.

Winegrowers must be chosen for their technical and commercial know-how.

Collection of the rent gives rise to the distribution of income to the shareholders in cash or sometimes, by option, in bottles (conversion in kind).

Management of the company and the real estate assets is fully delegated to the manager, in return for annual management fees.

The manager is appointed in the By-Laws and deals with everything.

The shareholders are kept regularly informed of the life of their grouping and developments in their assets. They take part in all collective decisions at General Meetings, notably for the appropriation of results.

Shareholder in a GFV: a long-term commitment in a non-trading company

A long-term investment

  • The investor is committed over the long term, generally over the duration of the lease (18 years to 25 years)
  • Resale of the shares is possible but requires a buying counterparty
  • The company does not guarantee the resale of shares

Subscribing to and being a partner in a partnership

  • GFVs are incorporated in the form of a partnership. As a consequence, partners have unlimited liability but this is several liability (each partner is liable for his share of the whole) and is subsidiary (a creditor must first exhaust remedies against the partnership).
  • Pursuant to the AIFM Directive, GFVs meet the definition of AIFs. However, pursuant to French law – including the more restrictive provisions concerning the “commercialisation” of shares in partnerships: any listing, soliciting, advertising or other form of solicitation of the general public is expressly prohibited for a GFV

Tax treatment of GFVs

Tax law provisions currently in force

Reduction of the taxable basis for any transfer without consideration (Articles 793 and 793 bis of the General Tax Code)

Value of shares exempt in the amounts of:

  • 75% up to the limit of €101,897
  • 50% above this threshold

Conditions : holding for 2 years and conservation by the beneficiary for 5 years

Donations (concluded before a notary) dating for more than 10 years will no longer have to be added back for inheritance purposes and will no longer be taken into account in assessing tax exemptions.

Reduction in the taxable basis (Article 885 H of the General Tax Code)

Value of shares exempt in the amounts of

  • 75% up to the limit of €101,897
  • 50% above this threshold

Effective date of the exemption:  : after 2 years of holding

Micro-regime for small real estate holdings

  • Taxpayers whose real estate income does not exceed €15k.
  • Subject to conditions, application of a fixed deduction of 30%

Standard tax regime

  • Real estate income taxable in the category of real estate income with the possibility of deducting tax-deductible charges, as well as interest on borrowings if the shares are acquired on credit.
  • Tax option irrevocable for 3 years.

Welfare contributions: 15.5%

Taxed at 19% + welfare contributions (15.5%) + specific tax if capital gains > €50k

Real estate capital gains: Deduction for length of the holding period

Total exemption after 22 years

  • 6%/year from the 5th to the 21st year
  • 4% for the 22nd year

Welfare contributions: Deduction for length of the holding period

Total exemption after 30 years

  • 1.65% /year from the 5th to the 21st year
  • 1.60% for the 22nd year

9% /year over and above 22 years.

THE RISKS ASSOCIATED WITH THE GFV

A long term investment, with no guarantee for the capital, with reduced liquidity

Risk of capital loss

Liquidity risk

Risks associated with partners’ unlimited liability

Risks associated with the winegrowing property market

Risk of asset concentration

Natural and sanitary risks