Social charges and non-residents' capital gains

This issue relates to the ‘De Ruyter’ ruling of the European Court of Justice in 2015, after which the French government agreed to make reimbursements of social charges to non-residents and to others who could show they were ‘not affiliated to the French social security system’.

This essentially related to residents of other EU countries, including the UK, as well as to residents of France who were affiliated to another EU country’s social security system, such as British retirees whose healthcare is paid for in France by the UK under the S1 form and who typically also have not worked in France (and therefore have not paid in to the French social security system).

Previously France had been levying the social charges on property incomes of non-residents since 2012.

‘Property incomes’ in this sense includes property capital gains and income from rents, but also (for French residents) income from investments and bank accounts.

‘Social charges’ in this case refers to levies like CSG and CRDS that help fund the social security system but provide no direct benefit to the taxpayer (unlike the cotisations that go towards workers’ pensions and healthcare etc). The full list includes also Contribution Additionnelle, Prélèvement Social and Prélèvement de Solidarité and they come to a combined total of 15.5%.

The upshot of the De Ruyter decision was that a person should not pay social charges in more than one EU country, especially as non-residents do not benefit from the French social security system.

Refunds were therefore allowed, however they had to be claimed at the latest by the end of the calendar year two years after the one when the charge was made. On top of refunds, people were entitled to interest at 0.4% per month.

This means that charges levied in 2015 may be still claimed back until the end of this year by writing to your tax office: that is to say, charges on capital gains on property sales in 2015, tax taken at source on certain investments, and tax levied in 2015 based on declarations of 2014 income.

Information in English was provided by the tax authorities at the following link http://proxy-pubminefi.diffusion.finances.gouv.fr/pub/document/18/19964.pdf

However as of January 2016 France made changes to its laws, which it said had now put its affairs in order with regard to the De Ruyter ruling.

This consisted of changing the use made of the money from the social charges levies, as part of the Social security finance law for 2016.

The changes mean that rather than the money now going to fund the general social security system, which only people who are ‘affiliated’ to it benefit from, the social charges mostly go to the fonds de solidarité vieillesse, which funds the Aspa pension top-up, a non-contributory benefit (ie. anyone living in France can benefit from it, whether ‘affiliated’ to social security or not).

The CRDS, which pays off social security debt, is also also now only being used to pay off debt on non-contributory benefits, officials say.

A Paris avocat specialising in tax matters told Connexion he had had some success in isolated cases in obtaining reimbursements for levies in 2016, but that the general policy had not changed.

Some lawyers have also argued that reimbursements should also be made to non-residents outside the EU, but this is also not the general policy.

Refunds need to be claimed either to your local tax office if you live in France or to the non-residents’ tax service if you live outside France, or in the case of property capital gains to the tax office of the area where the property is located.

You need to include proof of the charges contested (such as a copy of the relevant income tax and social charges statement) and evidence of not being a burden on the French sécurité sociale, such as a copy of an S1 form.