Clé France

The European Court of Justice ruling: social charges on non-residents is contrary to EU law.

All income generated by property assets held by individuals  residing in France are subject to social charges. The amended Finance Act for 2012 extended the scope of the payment of social charges to real income and real estate gains, from French sources received by non-resident individuals.

Since 2012, many non-French residents selling or letting their French properties had to pay those additional charges (15.5%) in addition to their capital gains or income taxes. This tax addition was highly criticised by the non-French residents as being discriminatory. A risk of double taxation was created on tax payers residing in a Member State.

The European Court of Justice in a judgment delivered on 26 February 2015, was asked to rule on the validity of the levy of social charges on patrimonial incomes perceived by a French-resident working in another Member State (Netherlands) of the European Union.

As expected, the Court has sanctioned the French tax regime entailing a cumulative application of social security legislation of two States. The court rules ruled this tax- accumulation is contrary to European law, and therefore prohibited between Member States (European Regulation no 1408/71 whose purpose is to ensure the freedom of workers within EU).

The court ruling is applicable to a French tax resident subject to the social security scheme of another Member State, and also applies to residents of another Member State when they are subject to social charges in France on their French property gains or incomes.

This decision should thus facilitate litigation cases already pending in France, opening the way for new claims for reimbursement of undue levies collected.d France have indeed special rules to establish in which country an individual is a tax resident) and existing double taxation treaties.

Francophile legal Consulting can assist you with international property matters. For more information on this topic, please do not hesitate to contact Loic Raboteau, managing director by completing the form below.

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A little more about FRANCOphile Legal Consulting Ltd.

The company was created in response to the need of legal experts for international private clients and businesses. People are no longer confined within their own country boundaries to work, create a business or purchase assets. National, international laws and new technology have enabled people and businesses to move and expand internationally, creating a demand to resolve cross-border issues.

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