Refund of social charges for non-residents in France : current situation
This decision was pronounced for foreign incomes (foreign life annuity receiving) received by French tax residents. But it can also be applied to non-residents who are subject to these social charges for their land and real estate capital gains since the 16 August 2012 law.
How to make a claim to obtaining the refund of the paid social charges (CSG-CRDS)?
You can try to obtain the refund of the social charges paid on the land incomes and the realized capital gains.
The tax instruction of the 20th of November explains in detail the modalities of this claim and clarifies the pieces of evidence to provide:
- Evidence of the taxpayer’s membership to a social security scheme other than the French one, in the EU, the EEA or in Switzerland.
- Tax notice for the social charges for the income from 2012 to 2014, or for each year concerned by the claim OR form 2048 IMM and sales certificate delivered by the notary, for the real estate capital gains.
- Proof of residence abroad (foreign certificate of residence).
This instruction has also clarified the deadlines for the claims:
- For people who paid social charges when paying a real estate capital gains tax or for any other income paid as a withholding tax, the claim has to be submitted at the latest on 31 December of the second year followingthe payment of this withholding tax. In this way, for a sale carried out in 2013, the claim has to be submitted before the 31st of December of this year.
- For people who paid social charges on land incomes, the claim has to be submitted at the latest on 31 December of the second year following their collection. So the incomes of 2012 which were taxed in 2013 can be claimed until the 31st of December of this year.
What is the current situation of the reimbursements?
The first acceptances of refunds have been obtained.
Who is concerned ?
Tax administration committed to reimburse the persons subjected to the social security scheme of a country other than France and situated in the EU, the EEA or in Switzerland. So it expressly excluded the other taxpayers. (For example a person under the American social security scheme)
The concerned countries are:
Germany, Austria, Belgium, Bulgaria, Cyprus, Croatia, Denmark, Spain, Estonia, Finland, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Czech Republic, Romania, The United Kingdom, Slovakia, Slovenia, Sweden, Island, Liechtenstein, Norway and Switzerland.
This discrimination between the non-residents of the EU and the non-residents of Third States to the European Union is highly questionable. Earlier, by a decision dated 20 October 2014, The Court of Cassation decided that the difference of tax rate between the non-residents of the European Union and the non-residents of Third States to the EU was contrary to the principle of the free movement of capital. As a consequence, the tax administration should be condemned on the same reasons if it continued to distinguish the non-residents for the application of the social charges.
So the reimbursement is not automatic for these non-residents but it is conceivable.
What is the amount of the refund?
The tax administration specified that the solidarity tax of 2 % due before the 1st of January 2015, as far as it doesn’t finance social security branches, is not concerned by the Council of State decision. So it will not be reimbursed.
So the social charges to be reimbursed are:
– the Generalized social contribution (CSG) of 8,2 %
– the contribution to the reimbursement of the social debt (CRDS) of 0,5%
– the social charge of 4,5%
– the additional contribution of 0,3%
That makes a total of 13,5%.
What about the future taxations?
With a communiqué dated 19 October 2015, the tax administration clarified that the non-residents affiliated to a social security scheme of a country other than France and situated in the EU, the EEA or in Switzerland are not subject anymore to the French social charges. Sothese persons have to pay only the 19% tax and the eventual surcharge (from 2 to 6%)
No proof of membership is required in support of the capital gains tax form. Should the notary verify the seller‘s situation?
Besides, this instruction also excludes the 2% solidarity tax which is not part of the reimbursement yet.
This instruction could be called into question since the 1st of January 2016. In fact, the article 15 of the Social Security Financing Act for 2016 assigns the social charges to the financing of the Old Age Solidarity Fund (Article L 135-2 of the Social Security Code). The Government has declared that it intended to maintain the social charges from the 1st January 2016 for the non-residents and it means to do it by the way of this « parade ».
This law is currently the subject of an appeal before the Constitutional Council.
We will find out in 2016, if this legislative amendment will generate position changes for the tax administration, namely:
– the call into question of the directive of 19 November allowing not to tax the non-residents affiliated to a social security system of a country situated in the European Union, the Economic European Area or in Switzerland.
– the stop of the automatic reimbursement to persons with a complete file submitted within the time-frame and being able to prove their membership to a social security scheme of a country situated in the European Union, the Economic European Area or in Switzerland.
Nevertheless, changing the allocation field of the social charges for the benefit of the Old Age Solidarity Fund would be very likely inoperative as far as the Old Age branch falls within the scope of Community Regulation of 1971, amended by the one of 2004. The non-compliance of the French legislation with the Community Regulations and the principle of unicity of the legislation could then be invoked.
To date, it is strongly recommended to the concerned taxpayers not affiliated to a French social security system to submit the claims before the deadlines, in order to avoid the risk of prescription of their request. This has be done whatever the position of the French government is.
Don’t hesitate to contact us for further information :
firstname.lastname@example.org / +33 478276747
Cabinet Roche & Cie, Chartered Accountant in Lyon, France.
Experts in Non-Residents Taxation.