Since 2012, social contributions have applied at a rate of 15.5%
on French rental income earned as of 1 January 2012. They also
apply at the same rate on French capital gains on a sale made on or
after 18 August 2012, whether directly or indirectly, of French
real estate and/or shares in companies owning French real
In a case dated 26 February 2015, the Court of Justice of the
European Union (CJEU) held that French social contributions paid on
income derived from capital (as opposed to income deriving from a
professional activity) fall within the scope of Regulation
N°1408/71, Article 13 of which provides that the people to whom
the Regulation applies shall be subject to the legislation of a
single member state only.
Under Regulation N°1408/71, France cannot require people who
are already subject to social contributions in their state of
residence or in the state in which they carry out a professional
activity to pay extra social contributions in France.
Clearly, the decision of the CJEU primarily benefits EU,
European Economic Area (EEA), and Swiss residents. However,
residents of third party countries should be able to claim
reimbursement of French social contributions previously paid on two
different grounds, as follows:
France has signed many international
social security agreements which prohibit the application of
overlapping legislation. Depending on the state of residence of the
taxpayer, such an agreement may be relevant;
It may be possible to rely on the EU
law principle of freedom of movement of capital. If EU-residents
are subject to more favourable tax treatment than non-EU residents,
this could constitute a restriction on the freedom of movement of
capital, and therefore be contrary to EU law. Non-EU residents
would be able to benefit from this.
A positive development
For the first time a French Court has ruled on the application
of the social contributions in respect of residents of third party
states. In a decision dated 25 March 2016, the Administrative Court
of Appeal of Marseille stated that, in the present case, the
application of social contributions to residents of third party
states constitutes a restriction to the freedom of movement of
capital. In this case, the court had to deal with the singular
situation of French nationals resident in Monaco. The French tax
authorities appealed against this decision.
Although there are outstanding issues and technical questions,
and the decision of the Administrative Court of Appeal will have to
be confirmed by the Supreme Court ("Conseil d'Etat"),
this decision is a good omen for the future.
Non-French tax residents who paid social contributions in 2014
have until 31 December 2016 to make a claim to the French tax
authorities. Social contributions paid in 2015 can be claimed until
31 December 2017. Social contributions paid during or before 2013
may no longer be claimed.
In conclusion, while the position of residents of third party
states is not yet fully clear, we encourage clients to make claims
anyway. A claim made after the deadlines above will be out of time
even if, in the future, the Supreme Court confirms the decision of
the Administrative Court of Appeal of Marseille.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The prospect of an internal investigation raises many thorny issues. This presentation will canvass some of the potential triggering events, and discuss how to structure an investigation, retain forensic assistance and manage the inevitable ethical issues that will arise.
From the boardroom to the shop floor, effective organizations recognize the value of having a diverse workplace. This presentation will explore effective strategies to promote diversity, defeat bias and encourage a broader community outlook.
Staying local but going global presents its challenges. Gowling WLG lawyers offer an international roundtable on doing business in the U.K., France, Germany, China and Russia. This three-hour session will videoconference in lawyers from around the world to discuss business and intellectual property hurdles.
The CRA provides new housing rebates for individuals who have purchased or built a new house or have substantially renovated a house or made a major addition to a house who plan on living in it personally or letting a relative live there.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).