Publication: French Tax Bulletin November 2015
02 November 2015
Social Charges: Further clarification and positive developments for certain non-residents
Social Charges – The French Government issues a “Communiqué”
Following the Conseil d’Etat ruling of 27 July 2015 (see our previous bulletins) the Direction Générale des Finances Publiques (DGFIP) published a communiqué (20 October 2015) outlining the terms applicable to any claim for a possible refund of social charges. This communiqué is also the official “go ahead” for tax offices to process the claims they have already received so far. As a result, claimants should soon start receiving replies from their tax offices.
The communiqué concerns individuals affiliated to an EU, EEA or Swiss social security regime.
- For French residents in this situation the claim concerns social charges levied on investment income or gains – the communiqué makes no distinction between employed or retired individuals nor does it distinguish the sources of the investment income or gains by reference to being French or non-French;
- ii. Individuals resident outside France may claim a refund in respect of the social charges paid on their French capital gains or unfurnished rental income. Note that the 2% solidarity charge payable before 1 January 2015 does not fund any French social security organisation and therefore cannot be refunded. Therefore in practice the refund will only concern a charge of up to 13.5% rather than the full 15.5%.
Claims filed in 2015 will be valid for the following but must be submitted before 31 December 2015:
- French real estate CGT paid from 1 January 2013;
- Levies on income and gains paid via tax assessments issued after 1 January 2013, i.e. based on income and gains received in 2012;
- Investment income taxed at source from 1 January 2013.
Taxpayers must include sufficient evidence for the claim to be processed adequately including a copy of the demand showing their social contributions and evidence that they are indeed registered under another social security regime.
Taxpayers who are not covered by an EU, EEA or Swiss social security regime may still attempt to file an appeal but at this stage the outcome is uncertain as they cannot rely on EU regulation No 1408/71.
If you require assistance with your claim, please contact our French tax team.
Local Property Taxes for Single and Elderly Taxpayers of Modest Means
The cancellation of the tax allowance (an extra half family’s share) granted to certain taxpayers living on their own (widowed, divorced, single), and having brought up children in the past, has had a knock on effect on their exposure to local property taxes. Indeed, as a result some taxpayers of modest means are now subject to income tax and have therefore lost the benefit of any exemption to property taxes. The Government recently promised to compensate taxpayers in this situation.
In practice this concerns:
- Taxpayers in the above situation who, as a result of the loss of the extra family share, are now liable to the taxe d’habitation in 2015 when they were exempt from this charge in 2014;
- Taxpayers who are over 75 years old and have received a 2015 taxe foncière but were exempt from this charge in 2014.
Those who have already paid these local taxes should automatically be refunded in early 2016. However, if they wish an earlier refund they will need to write to their local tax office and should expect the refund within three weeks. Those who have not yet paid their taxe d’habitation (due between 15 November and 15 December) are advised to ignore the assessment.
For assistance with your French tax affairs or with any trusts concerned by the French tax reporting please contact our French Tax team.