Social security contributions on French property sales for non-residents

It appears that the European Court is about to take its final decision regarding social security contributions on non-residents (by end of 2014).

This decision should strongly encourage English and European sellers (non-French residents) to claim the reimbursement of social security contributions that the tax authorities deducted from them.

Indeed, English individuals who sold a French property in recent years were required to pay French social security contributions of 15% on their profit, with some tax relief.

In the majority of cases, these French social security contributions are higher than French capital gains tax and are deducted once the deed of sale is signed. These charges cannot even be deducted from English capital gains tax (because they are not strictly “taxes”), therefore they represent a much too significant and prohibitive cost for English sellers.

Most French social security contributions would be unlawful

A legal case challenging French practices and opposing the Minister of Economy and Finance and Gérard de Ruyter was brought before the European Court (Case C-623/13). The Advocate General, whose opinion is expected to be upheld by the Court, communicated their opinion on 21st October: France is acting unlawfully when it deducts social security contributions from non-residents. It is highly probable that the European Court will take this opinion into account when it takes its final decision (before end of 2014) given that the Advocate General is objective and clear in their opinions. A decision that would strongly encourage English and European (non-French) sellers to claim the reimbursement of contributions that the tax authorities deducted from them…

Taking action

If there are concerned English or non-French resident sellers, we strongly advise them to contact immediately the notary who handled the sale of their property as well as the tax official whose calculations were used by the notaries, sending them a letter informing them that they are aware of the ongoing case and the opinion expressed by the Advocate General, and requesting confirmation of immediate reimbursement of contributions should the European Court rule that they were illegally deducted.