French social charge refunds post-Brexit: who can benefit?

Claims may now be made for overpayment of French social charges by people who are linked to UK social security – we look at which incomes are likely to be concerned.

Read more:Brexit: charges victory for UK pensioners in France and second homes

Firstly, amounts concerned are most likely to have been received last year, after the Brexit transition period was over, and before France’s recent ruling that those with UK links will continue to benefit from lower charges. The lower rates are usually only applied to people with links to EU/EEA/Swiss social security..

In 2020 the transition period meant that nothing had yet changed with regard to the income of people with UK links - however last year this group of people were thought not to benefit from the lower charges and higher rates were imposed.

However, France recently announced it is maintaining the lower rate opening up the right to reimbursements.

In what situations might people have overpaid?

One of the main situations concerned by ‘overpayments’ of French CSG and CRDS social charges, which have now been ruled not payable by those with UK links, is capital gains on second home property sales last year. CSG and social charges for these are levied immediately, not the following year, as they are for some other income kinds.

This relates to properties owned for less than 30 years (social charges decrease progressively between the sixth and 30th year of ownership).

With this proviso, it concerns French properties sold by UK residents, or French second homes or buy-to-let properties sold by residents of France.

One point to bear in mind, however, if you are a UK resident, is that French capital gains tax and social charges are deductible from your UK capital gains tax liability for the same sale.

In which case, depending on the level of your liabilities in the UK and France you may wish to weigh up the effects of lower or higher charges in France. There are also potentially issues with reclaiming the French charges if you have already used them to offset UK tax.

The other main kinds of income that are likely to have been subject to ‘overcharging’ in 2021 are investment incomes of residents of France who have S1 forms and have their healthcare paid for by the UK. This is mainly British state pensioners.

They may have overpaid on money that had ‘flat tax’ taken off last year when the income was paid out, at 30% including 17.2% social charges instead of reduced charges at 7.5%. This could include savings interest or assurance vie withdrawals.

You may, however, wish to wait to receive your avis d’imposition income tax and social charges statement this summer so as to use it in support of such a claim. For property sales, it would be best to include a copy of the 2048-IMM property capital gains declaration that was made at the time of the sale.

People concerned have until the end of the year two years after the one in which charges were levied, to lodge their claims.

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Brexit: How to reclaim overpaid French social charges