Forestry Investment: Does Heritage Add Value?
Forestry investment is a unique type of real estate investment that combines a financial return with a positive impact on the environment. This sustainable, diversified investment sector is getting a lot of attention lately.
Interview with Matthieu Gombault, Head of Wine and Forestry Banking Services at Societe Generale Private Banking, and Caroline de Mascarel, a notary specialized in forestry transactions and transfers.
Caroline, why is forestry investment so popular?
Financial investing in forestland is a growing trend in France. More and more people see forests as valuable assets – not just for their economic potential, but also for their role in protecting the environment.
But this isn’t some hot new trend. While forestry investment is getting a lot of coverage in the media, the tax benefits under the Serot Law date back to 1930 and under the Monichon amendment(1) to 1959. There are many reasons for its popularity.
Environmental awareness is pushing investors to explore opportunities that help protect natural resources. Forests are carbon sinks. They play a crucial role in the fight against climate change by absorbing the carbon dioxide produced by people and industry.
In addition, increased demand for sustainable forest products like lumber, paper products and biofuels is boosting forestry investment’s financial appeal.
Lastly, forests offer investors opportunities for diversifying their portfolios, with an attractive tax policy geared toward encouraging sustainable forest management. Forestry investment is also a good solution for transferring a portion of your wealth.
How would someone invest in this kind of asset?
French forests are a major source of raw materials, specifically timber. The timber industry fuels many sectors, including construction, furniture, energy and the paper industry. In 2022, the timber industry added more than €47 billion in revenue to the nation’s economy(6). And now that demand for forestry products is growing and technology is advancing, woodland management has really ramped up, focusing on maximum timber production alongside tree regrowth.
In terms of transfer, what are the tax measures put in place by law?
Whether it’s planned or incurred (donation or inheritance), transfers come with an attractive tax scheme.
Like certain investments, the transfer of forestland is exempt from transfer duties for up to three-quarters of its value, if the following conditions are met:
A ‘Monichon’ certificate is issued stating that the woodland and forests carry one of the sustainable management guarantees set out in the French Forestry Code.
The heirs, donees or legatees commit to applying one of the sustainable management guarantees to all woodland and forestland they receive for 30 years, for themselves and their assigns.
Under certain conditions, this preferential treatment can also be combined with the Dutreuil Pact.
Whatever the case, and whatever the investment profile or choice, it’s critical to find professionals who can help you understand what the best ownership or transfer method is for each individual situation.
Biography Caroline de Mascarel
Caroline de Mascarel is an associate notary in Paris, where she heads the forestry division.
An expert in the field, she has solid experience in forestry transactions and transfers, which she draws on when assisting her individual, institutional and executive clients with all of the legal, tax, real estate and, particularly, forestry aspects of transactions.
Additionally, De Mascarel has been a rural municipal councillor for over 10 years and teaches contract law in the Sorbonne master’s program.
(1) This amendment proposes modernising and adapting the ‘Sérot-Monichon’ plan, included in a 16 April 1930 law, to promote forestry that does more to respect natural cycles, protect biodiversity and facilitate carbon storage.
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