Tax authorities across the Channel have announced UK residents and British expats in France will no longer have to pay French social charges (prélèvements sociaux) at the full rate of 17.2 percent. This is provided they are already affiliated to the UK’s social security system and not dependent on France’s.
It includes existing and future S1 holders whose healthcare is paid for by the UK.
From now on, these people will be charged only a 7.5 percent solidarity charge. This was how it worked before Brexit.
The lower social charges come after European and French court rulings which said the CSG and CRDS charges – that help fund France’s social security system – should not be paid by people linked to the system of another European country.
Cross-border tax experts hailed the news as “fantastic” for Britons renting out a gîte or selling a second home in France because social charges are levied on net rental income and capital gains.
It means that if a gîte generates a net rental income of £4,130 (€5,000) per year, then after January 1 last year the social charge would have been £710 (€860). However, now they will only pay £309 (€375).
The savings are believed to be more dramatic for someone with capital gains tax to pay on a French second home or investment property.
Capital gains in France is abated over a period of 22 years and the social charges start to diminish after five years of ownership. This reduces to zero after 30 years.
If after the abatement, you are left with social charges still to pay on a gain of £82,610 (€100,000), you would now be charged £6,195 (€7,500) rather than £14,208 (€17,200).
READ MORE ABOUT DIANE ABBOTT’S ‘DREADFUL STATEMENT’
In order to qualify, people must be citizens or legal residents of the UK, France or another EU member state and not dependent on the French social security system.
The French tax office has confirmed that Britons who have wrongly been charged the higher rate since it was introduced on January 1, 2021, can apply to get their money back.
Jason Porter, of Blevins Franks, which provides specialist financial advice to British expats in France, told the Complete France website: “This 9.7 percent reduction in social charges is obviously fantastic news for UK nationals with rental income and gains.
“The fact those who have already paid excess social charges in previous years are able to recover this is very much welcome.
Mercury plunges to sub zero as arctic blast of -5C to hit Britain [REVEALED]
Andrew Neil brilliantly pinpoints UK changes to stay after Ukraine [REPORT]
Prince Harry criticised for ‘navel-gazing’ Ukraine statement [LATEST]
“It has always been frustrating that social charges cannot be offset under the terms of the UK-France Double Tax Treaty, but at least the rate is now reduced to 7.5 percent.”
Fabienne Atkin, a solicitor in French legal services at Ashtons Legal, told Complete France: “This should offer some comfort for people selling their French holiday home.
“There are some caveats, however. For example, it will be necessary to establish that the sellers are indeed affiliated to the UK National Insurance system and that they are not obliged to contribute to the equivalent French system.”
Ms Atkin added that the post-Brexit requirement to appoint a professional fiscal representative stays in place. This applies to those selling a French property for more than £123,915 (€150,000) which is not their main home.
This agent checks that the correct amounts of capital gains tax and social charges are paid. This is a requirement for all non-residents from outside the EU.
Ms Atkin said: “It is worth bearing in mind that their fees can range from around 0.5 percent to one percent of the sale price.”
To claim, you need to make a “réclamation” to the relevant tax office.
For a non-resident claiming back charges on rental income that would be to the Service des impôts des particuliers non-résidents.
If the claim is about a payment on a property capital gain, then you should contact the tax office covering the area where the property is situated.