Has Capital Gains Tax changed after Brexit?

Has Capital Gains Tax changed after Brexit?

Good news – capital gains tax (CGT) will not be affected by Brexit

CGT does not apply to your principal residence but to second homes.

Formerly, EU nationals with property in France paid 19% on gains from renting or selling second homes because they avoided the French ‘social charge’ that was added to capital gains. Non-EU/EEA nationals paid this tax at a staggering 49%.

However, the law was changed in 2015 and now both EU and non-EU nationals pay capital gains at 19% plus 15.5% social charge – i.e. 34.5%.

There has been continuing legal controversy over the social charge being applied to non-residents.

Non-residents also used to be obliged to appoint a French tax agent at the point of sale to check that the correct amount of tax had been calculated. This was generally considered a bit of a scam since this is already the notaire’s job and since these so-called tax agents charged what they liked. This requirement was outlawed for EEA residents from 1st January 2015 following a judgement in the European Court, but can still be applied to non-EEA residents. Whether this could affect British sellers in future depends on whether we stay in the single market or not.

The amount of CGT you are liable for is calculated by deducting the sale transaction costs and the cost of major renovation work from your net proceeds from the sale. The renovation work, however, must have been done by a registered builder and you will need to produce receipts. Nor can you count work that you have done yourself.

There are five rates of taxation, depending on how much profit you have made on the house. Most countries have a taxation treaty with France under which capital gains on the sale of property in France is taxed in France.

For those resident in the UK, any French tax paid is set off against any liability in the UK.

Visit the Brexit zone to find out more

This article was updated in February 2020.

Share to:  Facebook  Twitter   LinkedIn   Email

Previous Article French News Weekly: Firefighters in Flames and Confirmed Cases of Coronavirus
Next Article Healthcare Changes in France in 2020

Related Articles

Miranda Ingram is a former Fleet Street journalist and foreign correspondent. She met her Russian husband while covering the collapse of the USSR in the nineties and in 2003 they settled in Normandy with their two young children. In France, she launched a glossy English-language magazine for Normandy and edited the nationwide English-language newspaper theFrenchPaper. While continuing to work part time as a journalist she is also author of a forthcoming book on bringing up children in France as well as the novel Children of Utekhi. She enjoys wine and conversation, empty Normandy beaches and is an avid reader.

Leave a reply

Your email address will not be published. Required fields are marked *