Refund of Social Charges for Non-Residents?

[Read July 2015 update]

If you sold your holiday home in France you may be due for a refund, but you need to act quickly. A breach of European regulations might very well leave France no choice but to reimburse any non-resident tax payer who has been made to pay social security charges (CSG an CRDS) on their income from assets or employment in France.

After more than a year back and forth, the European Court of Justice will soon rule on whether French tax offices can levy social contributions on income earned by non-residents. The case pivots on EU regulation No1408/71, dated 1971, that confirmed that European residents were only required to pay social charges in the country of which they were resident. The EU court case is expected is to be finalised before the end of year, and law and tax professionals are expecting the application of social charges to non-residents to be overturned.

[mrb]

According to the loi de finances in 2012, rental and capital gains income realised in France became subject to a global social charge of 15,5%. The government applied the principle of “equality” to treat both residents and non-residents in the same manner. The counter-argument, however, is that the CSG is not a tax, but a social contribution, and if you are not resident in France you get no benefits at all from these charges.

Time Is Running Out

The EU court ruling is expected imminently, but the clock is ticking to file a claim.  According to a decision of the Administrative Court of Paris dated October 16, 2013, N. 218875 and 1218924 there is a very short period during which social charges levied on capital gains in France can be contested – you have to file the claim before December 31 of the year following the taxation. After this date, it may no longer be possible to exercise the right to claim a refund. It is not clear if the decision will have effect retroactively.

Professionals for the moment are advising their clients to send in the claim just in case.

Tribunal Administratif de Montreuil
c/o Greffe
7, rue Catherine Puig (niveau 206 rue de Paris)
93558 Montreuil Cedex
France

The word in the street seems to be to get your claim in and not wait until the court ruling. In any case the refund would not be applied automatically, you’d have to request it, so you might as well go ahead and make sure that it is filed before the end of the year. As with any official correspondence, send it by certified letter or LRAR lettre recommandée avec avis de réception.

Source: Toussurlesimpots, Photo by Cédric Puisney via Flickr

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