The door has reopened for new French social charges claims. If you have sold your French property in 2017 or 2018 it is time to act! Let me give you a brief summary of the French social charges saga.
In 2015, France was condemned by the European Court of Justice (ECJ) in the case law De Ruyter which held that taxation of social charges on French capital income of persons affiliated to a social security system of another Member State of the European Union (EU) or European Economic Area (EEA) or Switzerland was contrary to the EU legal principle of unity of social security legislation.
This judgement was then followed the same year by a decision of the highest French administrative Court The “Conseil d’Etat” which confirmed the ruling of the ECJ. The “De Ruyter” case led to a large number of tax claims against the French Tax Office until the budget 2016 when the French government decided to maintain the taxation of social charges on non-residents despite its controversy by reallocating the proceeds of the social charges into a new category.
However, the French government interpretation that the social levies were a tax rather than a social security contribution was rejected in 2018 by the the Court of Appeal of Nancy which ruled out that the taxation was against EU law. The French government appealed against that decision. However taking into account the ruling of a recent judgement of the ECJ of 14th March 2019, the Highest Administrative Court (« Conseil d’Etat ») upheld the decision of the Court of Appeal.
Time to act !
Therefore, if you were residing in a EU/EEA country other than France or in Switzerland and were registered with the health care system of your home country and paid social charges on the net capital gains when you sold your French property in 2017 or 2018, you can now make a claim. Under French law, any tax claim must be issued before the 31st December of the second year following the year when the tax was paid. If you sold your French property in 2017, you have until the end of 2019 to make a claim. If you sold your French property in 2018, you have until the end of 2020 to make a claim. For those who sold their French property in 2016, it is too late unless you issued a claim before the end of year 2018.
For those who are considering selling their French property in 2019, the good news is that the French government took the lead by deciding in its new tax budget that from the 1st January 2019, non-French residents affiliated to a social security of a EU/EEA social security will no longer have to pay social charges but still be subject to the tax of prélèvement de solidarité (7.5%). For those residing outside the EU/EEA, they will be subject to social charges of 17.2%.
How to claim the social charges?
A tax claim can be issued to the French Tax Office for non-residents or to the tax office where the taxpayer was registered. It must be legally motivated and include all supporting documents establishing the right to claim for a refund of the French social charges.
We have received many enquiries from concerned clients who have seen their tax claim rejected because of poor drafting or lack of evidence.
We therefore recommend that you seek legal advice to ensure that your claim has been correctly drafted and accompanied with the necessary supporting documents.
Our Firm can assist you in claiming back the social charges you have paid. We are very experienced in this area and have successfully claim back social charges for our clients since 2014.
At B&M Law LLP, we will be happy to assist you in recovering the social charges undue levied on the French property you sold. Please contact Loic Raboteau via email at firstname.lastname@example.org for a free preliminary assessment of your case and a quotation.