French Social Taxes – Ruled Unmerited

22 April 2015

Capital gains on unfurnished French property owned by those not classed as a French resident have been ruled unjust by the European Court of Justice. This means that those owning such property are no longer going to be expected to pay ‘social charges’ on income from unfurnished rental or capital gains.

Previously if you were a non-French resident you would have been subject to a 15.5% social charge from both French-sourced income on top of capital gains and actual income tax.

But this change has been ruled discriminatory and for those that have already paid social charges on unearned income are now able to make claims into seeking refunds on unfairly paid tax. 

This particular issue was raised firstly in 2013 when the EU attorney general ruled that the social security based social charges system should not be applied twice for a non-resident of France. It stems from a Dutch national living in France who took a claim to the French administrative court regarding such charges on a foreign life of annuity where the property owner had paid contributions to social security in their own country.

The Director at Blevin Franks responsible for international advice, Jason Porter, commented about current unemployment rates in France that had risen in 2015 and hinted that these figures may mean that

“ the country was not well positioned to repay taxes it had already spent. “

Summary

The changes may ring positively for residents of other countries with property interest in France, or non-French residents, but in Mr Porters’ words they may be “short-lived.”

There is speculation of future tax changes and that France will require a change in tax revenues in some way. There may be a tax introduced with a similar rate although it may not be attached in any way to social security.

We are Alexander Peter Wealth Management and invite you to call or email our specialists on [email protected] or +44 870 495 1323. Our team will speak to you about your situation, your portfolio and any future plans you have whilst living as a non-French resident. 

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