French social charges ruled illegal by Court of Justice of the European Union
The Court of Justice of the European Union has ruled that it is illegal under EU law to levy French social charges of 15.5% on income and gains generated by non-French EU residents from renting or selling their French property. As reported in the December issue of FPN, last year a case was brought before the court to challenge the application of social charges on non-French residents.
In October the Advocate General gave the opinion that France had acted illegally in doing so, and as a result it was widely anticipated that the Court of Justice would follow this advice.
France began applying social charges of 15.5% in 2012. The new ruling on 26 February 2015 was made on the basis of the widely established EU principle that a resident of a member state has to contribute to the social security system of one member state only.
For those who are about to sell a property in France, it would be wise to confirm with your notaire whether the social charges will be deducted.
“It would seem logical that if the levy is illegal then it is not enforceable and you do not have to pay it,” comments solicitor David Anderson of Sykes Anderson Perry Limited. “However, notaires, as public officials, are under an obligation to deduct all taxes and charges due and may be reluctant to agree not to deduct the social charge until there has been a formal change in the law. We recommend you obtain confirmation in writing from your notaire that there will be no deduction for social charges before you sign any document committing you to sell.”
Those who have already sold a French property and paid the social charges may be able to claim a refund from the French tax authorities. However a time limit may prevent you from doing so depending on when the property was sold.
“Non-French residents who sold in 2014 are in a stronger position but those who sold in 2012 or 2013 could also try,” says David Anderson. “The stricter deadlines for submitting claims which were imposed recently by the French government, preventing anyone who sold in 2012 or 2013 from making a claim, may be open to legal challenge.
If you have already made your claim, you should now write to the French tax administration asking for your money back and also asking for a refund of any tax agent’s fees.”
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