January 9, 2023

Tax Rebates for the sale of French property

French Property Capital Gains Tax RWK Goodman

A reduced social charges rate of 7.5% (instead of 17.2%) generally applies to EU taxpayers selling French real estate at a profit. This is mainly due to the provisions of the EU Regulation on the coordination of social security systems.

Brexit and social charges when selling properties in France

The UK has now left the EU and the EU Regulation no longer applies to those affiliated to UK social security. Consequently, from 1 January 2021 French tax authorities and advisers applied the standard 17.2% social charges rate to UK residents.

French tax authorities U-turn on capital gains tax

The Trade and Cooperation Agreement of 30 December 2020 includes rules on social security coordination between the EU and UK.

Surprisingly, in February 2022 the French tax authorities updated their administrative guidance in relation to the effects of Brexit and now consider that the rules in the Trade and Cooperation Agreement mirrors the rules  in the EU Regulation and the reduced social charge rate of 7.5% can be applied to UK taxpayers.

On the basis that French capital gains tax on property sales is due within 30 days of completion, those UK taxpayers who sold a French property at a profit in 2021 and early 2022 have overpaid social charges. These taxpayers are now able to claim a tax refund for the additional social charges unduly paid.

Taxpayers who believe they are eligible to make a claim have until 31 December 2023 (or 2024 for sale in 2022) to lodge a claim with the French tax authorities.

Please note this article is for general information. You should not rely on it without advice on the specific facts of your case.

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