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Social charge on non-resident French property sales ‘almost certainly illegal’

Posted by: In: Real Estate 13 Nov 2014 Comments: 0 Tags: , , , , , , , , , , ,
Non-resident French property sellers may be eligible for a 15% French Social Charge refund

Non-resident French property owners who have sold their properties and paid the 15% French Social Charge should write to their notaire requesting a refund with interest, if the European court decides they were deducted unlawfully, says a legal expert

The 15% French Social Charge levied on international owners selling French property is almost certainly illegal, experts believe, following comments from the Advocate General.

Foreign property owners who have sold a property and paid the 15% French Social Charge should write to the notaire who handled their sale requesting a refund with interest, should the court decide they were deducted unlawfully, says a UK-based legal expert.

As part of an on-going European court case, the Advocate General expressed an opinion in October that the charge by France is illegal, says David Anderson, Solicitor Advocate, Chartered tax adviser and barrister (unregistered) at Sykes Anderson Perry Limited, Solicitors and Chartered Tax Advisers in London.

Mr Anderson says, “UK residents who have in the past couple of years sold French property have been forced to pay French social charges at the rate of 15% on their gain, with some taper relief.

“These social charges have in many cases been more than the French capital Gains Tax and have been deducted by the notaire on completion. The French social charge cannot be deducted against UK capital gains tax (because it is not a “tax”) and so is a real and unwelcome cost for UK sellers.”

Mr Anderson says it is almost certain that the French social charge deduction is illegal. “A relevant case challenging France’s position is now before the European Court, Ministre de l’Economie et des finances v Gerard de Ruyter (Case C-623/13).

“The Advocate General, whose views the Court normally follows, has given his opinion on 21st October 2014, which is that France has acted illegally in making this charge on non-residents. It seems very likely the European Court when it makes its final decision shortly (before end 2014) will take this view as the Advocate General is very clear in his opinion. This should open the way for UK and other non-French sellers resident in the EU to claim back the social charge from the French Fisc.

“We recommend that any UK sellers in this position should write now to both the notaire who dealt with their sale and to the tax agent whom notaires use to calculate the tax, saying that they are aware of the above case and the Advocate General’s opinion and ask for confirmation the deducted French Social charge will be refunded to them forthwith should the court decide they were deducted unlawfully together with interest.”

By Adrian Bishop, Editor, OPP Connect
Twitter: @opp_connect

Source: OPP


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