French social contributions: important changes

Authors:

REF: 007

Change for nonresidents in French Social Contributions Rules
Have you had rental income from France within the last 2 years? Have you sold real estate in France within the last two years? Are you a non-resident? If these questions are relevant to your situation, there have been some important changes in European legislation of which you need to be aware.

The European Court of Justice (EUCJ) has ruled against France’s levying of social contributions from non-resident French or foreign individuals, in a change for nonresidents in French Social Contributions Rules The CSG (Contribution Sociale Généralisée) and the CRDS (Contribution au Remboursement de la Dette Sociale) have been obligatory for non-residents with rental/real estate income in France until now. Following the judgment handed down by the EUCJ on the 26th of February 2015, it has been declared that these contributions cannot be justified given that these non-resident contributors do not themselves benefit from French social security schemes.

Therefore, Real estate owners who declared rental income in 2012 but paid CSG/CRDS in 2013, or who realized a capital gain upon sale of their real estate from 2013 onwards, can ask for the CSG/CRDS refund from the French tax authorities until the 31st December 2015. It must be noted that there is a claims limitation period of 2 years. As such individuals who realized a capital gain upon sale of their real estate in 2012 and paid CSG/CRDS on the same day cannot now get a refund.

This change for nonresidents in French Social Contributions Rules affects an estimated 60,000 French or foreign individuals living outside France who have been paying the CSG and CRDS in the last 2 years when renting or selling their real estate in France; they are entitled to be refunded for their CSG/CRDS contributions.

CRDS is fixed at a rate of 0.5% of the relevant income. CSG is variable depending on the type of revenue and the contributor’s situation, but can have a deductible rate as high as 5.1% of revenue.

From now on, for those considering expanding into the French property market from abroad the implications of the EUCJ’s ruling are hugely significant. Rental or sale income from French property will no longer be taxed by CSG or CRDS. In light of the change for nonresidents in french social contributions rules, given the figures above, France is now a much friendlier environment for the foreign/non-resident property investor.

If you are eligible to reclaim on CSG and CRDS contributions, we can assist you in filing for a refund.
Our experience in working with clients outside of France and the expertise our French CPAs offer in French tax rulings make us well-placed to provide the service you need to reclaim. Let us help you to make the tax reclaims to which you may be entitled.

If you feel that you may be affected by the change for nonresidents in French Social Contributions Rules but are unsure about how to proceed, please contact us. Our team of experts will be happy to provide you with more information and can tell you if you are eligible. If you are, we can assist you in filing for a refund.

Sources:

• http://vosdroits.service-public.fr/particuliers/F2971.xhtml