On March 21, 2016 the French Tax Authority has started making refunds of the social charges unlawfully deducted on sales by non-French sellers of their French properties. The amount being refunded is 13.5%. 2% of the 15.5% deducted has not been refunded on the basis that it is not covered by the EU Court decision in the De Ruyter case. Payments are being made direct to claimants bank accounts as notified by claimants to the French Tax Authority. Claimants should contact the relevant tax authorities to ensure funds are transferred to them.
France has deducted social charges at 15.5% on the sale of French properties by non-residents as well as on rents received by non-residents. This was declared illegal by the European Court. Many people have requested repayment of these charges which have not been made until French law is changed to conform to the EU Court decision.
France also required non-resident sellers of French land to appoint a tax agent who typically charged 1% of the sale price. This has also been declared illegal and no longer applies. Most people who reclaimed the social contributions also claimed for repayment of the tax agent’s fee.
In October 2015, the French government said that the EU decision means that money collected from non-residents must no longer be aimed at financing French social security payments. They therefore intend to continue levying this contribution but applying the money raised in a way which does not conflict with their interpretation of the EU ruling. New laws will be passed to cover this.
However people who have already paid the contribution [under the label of social security payments] which has been declared illegal, should soon be able to reclaim it provided they are EU residents. It is unclear whether interest will be paid or any loss for currency movements.
There is no word yet on refund of tax agents’ fees.
The French government is paying interest on the money but is not paying for any currency loss or refunding tax agents fees. Sykes Anderson Perry’s view is that these should also be refunded. The total sum the French government is having to refund is understood to be well over a billion euros.
David Anderson, is a Solicitor Advocate, Chartered Tax Adviser, Barrister (Unregistered), Director and Co-founder of Sykes Anderson Perry Limited. He is qualified as a solicitor advocate and has higher rights of audience in all civil and criminal courts in England.
This article is for general information only. French tax and social security law are highly specialised areas and you should only act or refrain from acting after receiving full professional advice on the facts of your particular case.
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