As provided in the French Budget for the year 2019, non-residents who are not registered with the French health care system and are subject to the health care system of a country of the European Union (EU), the European Economic Area or Switzerland are exempt from the payment of the social charges CSG and CRDS on real estate capital gains. Those concerned will pay a solidarity tax of 7.5%. Those who are not eligible will pay the social charges at a total rate of 17.2%.
A Decree No. 2019-633 was published on 24 June 2019 which specifies the supporting documents to be produced in order to be exempt of the CSG and CRDS.
To justify his/her situation, the seller may produce one of the following 4 documents:
- Form S1 "Registration for sickness insurance benefits" pursuant to European Regulations (EC) No 883/04 and (EC) No 987/09 and indicating the person's affiliation with one of the Member States of the European Union, the European Economic Area or Switzerland; or
- Form A1 "Certificate concerning the social security legislation applicable to the holder" pursuant to European Regulations (EC) No 883/04 and (EC) No 987/09; or
- "A certificate of affiliation equivalent to the forms S1 and A1 issued by the institution with which the person is affiliated; or
- A certificate of affiliation to the common social security scheme of the institutions of the EU.
As regards to justifying the non-affiliation with a compulsory French social security scheme, there is currently no centralisation between the various schemes and, as a result, it is impossible to obtain a certificate covering all possible schemes. The solution is therefore to have the seller sign an affidavit confirming that he is not covered by a compulsory French scheme.
It is important to note that the non-resident's situation must be considered at the time the capital gain is realised, meaning when the deed of sale (“acte de vente”) is signed. It will therefore be necessary to ensure that the supportive documents provided will be valid on the date of this taxable event.
If you are a UK-resident and has started the selling process of your French property, make sure that the deed of sale is signed before Brexit day if you want to avoid the payment of the French social charges at the rate of 17.2%.
If you are in the process of selling your French property and need legal assistance, please do not hesitate to contact Loic Raboteau via email at firstname.lastname@example.org.