Disclaimer: This page does not set out to give anything other than a glimpse of certain aspects of this area of French Law and professional advice should always be sought from a duly specialised French practitioner prior to undertaking any steps whatsoever.
Possibility for British & Irish residents to claw back French CGT
In the event that a UK or Irish resident were to sell a second home in
France, the French tax authorities have been charging Capital Gains Tax on
the fruit of the sale at 19% but then adding an extra 15.5% corresponding to
"charges sociales" being special French social security contributions
(doubtless to attempt to go some way to fill the black hole of the huge
French social security deficit).
For example, the France-UK tax treaty does not provide for double taxation
relief in respect of this supplementary percentage.
Although this "contribution" was challenged internally, it was subsequently
validated by the French Constitutional Court.
However, it is subject to considerable criticism from the European Union
institutions as under the "single applicable legislation" rule, EU
regulations state that a person is subject to one social security system
It follows, according to the critics, that France cannot subject immovable
property income of non-French but EU tax residents to French social
contributions without breaching European law.
In this context, the European Commission has recently begun infringement
proceedings against France and the Court of Justice of the European Union
(CJEU) has been asked to give a preliminary ruling on this very point.
In the latter regard, the Advocate General of the CJEU has just released her
preliminary opinion which is largely favourable to the non-French taxpayer.
This is good news prima facie, albeit that confirmation by the full Court is
However, based on the above, UK and Irish taxpayers are we believe able to
apply for a refund from the French tax authorities now and were the refund
to be refused then proceedings would need to be commenced before the French
Courts on the grounds of EU law.
Without though wishing to be perceived to be overly cynical, we observe that
the French State has a something of a track record in at least delaying such
Indeed given the potential budgetary implications of a series of claims of
this nature linked to the current far from brilliant health of France's
finances, it is I am afraid to be expected that the French government will
not give in easily and will not comply before it absolutely has to.
For example, it would be in its interest to draw matters out as much as
possible such that as many claims as possible are time-barred.
In the present circumstance, and in the light of French statute of
limitations rules, any challenge to the application of French social charges
on real estate capital gains realised in 2013 will be time barred if not
filed before 31 December 2014.
It is therefore strongly advisable to file a formal initial claim before 31
December 2014 for a refund of the French social charges which have been we
believe were wrongfully applied.
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