Home >
Real Estate >
Expected removal of social charges on income from French immovable property for non-residents affiliated with another social security scheme of the European Union or Switzerland
Expected removal of social charges on income from French immovable property for non-residents affiliated with another social security scheme of the European Union or Switzerland
Within the framework of the draft laws on finances and social security financing, the Minister of Public Accounts has made an unexpected announcement, namely the removal of the CSG / CRDS (social charges) on income from French immovable property and immovable capital gains realized by French expatriates and foreign non-residents affiliated with a social security scheme in the European Union or Switzerland.
Reminder of the judicial proceedings
According to de Ruyter case-law (Court of Justice of the European Union - CJEU, 26 February 2015, No. 623/13 and then Conseil d'Etat, 27 July 2015, No. 365511), taxpayers affiliated with a social security scheme in the European Union (EU), in the European Economic Area (EU + Iceland, Liechtenstein and Norway) or in Switzerland are not liable for the payment of social charges in France taken on their income from immovable property, under Community Regulations 1408/71 and 883/2004 prohibiting the concurrent affiliation with multiple social security schemes.
In order to thwart this jurisprudence, as of January 1st, 2016, the French State amended the budgetary allocation of the product of the social contributions.
Thus, income from immovable property (rental income and income from furnished tenancy rental) and immovable capital gains achieved in France by non-residents are currently subject to social charges of 17.20%.
The Administrative Tribunal of Strasbourg, in a judgment dated 11 July 2017 (No. 1700440) and the Administrative Court of Appeal of Nancy (judgment dated 31 May 2018 - Case No. 17NC02124) ordered the reimbursement of social contributions charged to non-residents within the framework of the new legislation, considering the latter to still be non-compliant with European law.
Subsequently, the CJEU in a judgment Jahin (18 January 2018 - Case C.45-17) considered that persons affiliated with the social security scheme of a third State could not benefit from the application of Community regulations preventing concurrent affiliation with multiple social security schemes. The difference in treatment is justified in particular by the protective clause (Article 65 of the TFEU).
What should change
The Government proposes to put an end to these debates by removing, as of the date of entry into force of the proposed amendments, the social charges on income from immovable property (rental income) and immovable capital gains realized in France by non-residents.
The announcement of this removal should also allow French expatriates and foreign non-residents affiliated with a social security scheme in the European Union, in Switzerland or in a Member State of the European Economic Area, to file contentious claims in order to be reimbursed social charges unduly paid in the past.
Such claims must be filed without even waiting for the final adoption of this draft; indeed, the claim period expiration with regard to income from immovable property made in 2015 and immovable capital gains realized in 2016 will expire on 31 December 2018.
The commencement of litigation proceedings for social charges paid in 2016 therefore assumes rapid action and the presentation of claims meeting the legal conditions of form and substance, particularly as regards submissions and supporting documents.
Our Firm, based in Lyon and Aix-en-Provence but intervening all over France, is at your disposal to advise you and file your claims in the shortest time possible.
Reminder of the judicial proceedings
According to de Ruyter case-law (Court of Justice of the European Union - CJEU, 26 February 2015, No. 623/13 and then Conseil d'Etat, 27 July 2015, No. 365511), taxpayers affiliated with a social security scheme in the European Union (EU), in the European Economic Area (EU + Iceland, Liechtenstein and Norway) or in Switzerland are not liable for the payment of social charges in France taken on their income from immovable property, under Community Regulations 1408/71 and 883/2004 prohibiting the concurrent affiliation with multiple social security schemes.
In order to thwart this jurisprudence, as of January 1st, 2016, the French State amended the budgetary allocation of the product of the social contributions.
Thus, income from immovable property (rental income and income from furnished tenancy rental) and immovable capital gains achieved in France by non-residents are currently subject to social charges of 17.20%.
The Administrative Tribunal of Strasbourg, in a judgment dated 11 July 2017 (No. 1700440) and the Administrative Court of Appeal of Nancy (judgment dated 31 May 2018 - Case No. 17NC02124) ordered the reimbursement of social contributions charged to non-residents within the framework of the new legislation, considering the latter to still be non-compliant with European law.
Subsequently, the CJEU in a judgment Jahin (18 January 2018 - Case C.45-17) considered that persons affiliated with the social security scheme of a third State could not benefit from the application of Community regulations preventing concurrent affiliation with multiple social security schemes. The difference in treatment is justified in particular by the protective clause (Article 65 of the TFEU).
What should change
The Government proposes to put an end to these debates by removing, as of the date of entry into force of the proposed amendments, the social charges on income from immovable property (rental income) and immovable capital gains realized in France by non-residents.
The announcement of this removal should also allow French expatriates and foreign non-residents affiliated with a social security scheme in the European Union, in Switzerland or in a Member State of the European Economic Area, to file contentious claims in order to be reimbursed social charges unduly paid in the past.
Such claims must be filed without even waiting for the final adoption of this draft; indeed, the claim period expiration with regard to income from immovable property made in 2015 and immovable capital gains realized in 2016 will expire on 31 December 2018.
The commencement of litigation proceedings for social charges paid in 2016 therefore assumes rapid action and the presentation of claims meeting the legal conditions of form and substance, particularly as regards submissions and supporting documents.
Our Firm, based in Lyon and Aix-en-Provence but intervening all over France, is at your disposal to advise you and file your claims in the shortest time possible.