Since 2012, many non-French residents selling or letting their French properties had to pay social charges (15.5%) in addition to their capital gains or income taxes. This tax addition was highly criticised by the non-French residents as being discriminatory. A risk of double taxation was created on tax payers residing in a EU Member State.
The European Court of Justice in a judgment delivered on 26 February 2015, was asked to rule on the validity of the levy of social charges on real estate incomes perceived by a French-resident working in another Member State (Netherlands) of the European Union. As expected, the Court has sanctioned the French tax regime entailing a cumulative application of social security legislation of two Member States. The court rules ruled this tax- accumulation is contrary to European law, and therefore prohibited between Member States (European Regulation no 1408/71 whose purpose is to ensure the freedom of workers within EU).
The court ruling is applicable to a French tax resident subject to the social security scheme of another Member State, and also applies to residents of another Member State when they are subject to social charges in France on their French property gains or incomes.
Therefore if you are not residing in France and you are residing in another EU Member state where you are subject to its local social tax system, you can issue a claim to recover the social charges you paid in relation to sale of your property in France.
If you paid the social charges in 2013, you have up to the end of 2015 to issue a claim according to the French Procedural Tax Code. However, following the aforementioned European Court Ruling, we are of the opinion that the deadlines can be legally challenged.
Your claim must be issued via recorded delivery to the non-residents tax office of Noisy-le-Grand (suburb of Paris) and must be accompanied by supporting documents (proof of your ID, proof of address, your capital gains tax declaration, supporting documents that you are subject to the social tax system of the country where you are residing, copy of the “acte de vente”). The French Tax Administration will have 6 months to respond to your claim. If your claim is rejected or in case of lack of response, your claim can be brought in the administrative court of Montreuil .
Your claim must include legal argumentation and we therefore recommend that you instruct a French legal advisor to support your case, especially if the matter goes to court.
The legal cost will vary between legal advisors according to the particularities of your case.
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 or rented out. Please contact Loic Raboteau via email at firstname.lastname@example.org for a free preliminary assessment of your case and a quotation.