FRANCE has one of the highest percentages of property owned by people not native to the country, with over three million French properties, or 10% of the national housing stock, owned by non-French nationals, writes Guillaume Barlet.
About 2.7 million of those properties are owned by EU citizens, with the British being the nation with the largest number. This means any change to property laws or taxes in France is likely to affect thousands of Britons.
A French Law passed on 16 August 2012, forces all residents of the European Union and EFTA to pay social contributions of 15.5% on a capital gain arising from the sale of property.
These charges are levied in addition to the existing 19% Capital Gains Tax applied to all sales since 17 August 2012. However, these contributions give no rights to social benefits in France.
Experts in the French property market were concerned the new charges could suppress the French housing market in areas where non-French ownership of property was common.
However, others stated French property law and tax rates change regularly, and many owners buy with the intention of not selling for a quick profit, and as such would not be overly bothered by the new social charges.
The opening of an infringement procedure against France by the European Commission, and the opinion issued by Advocate General Sharpston at the Court of Justice of the European Union (ECJ) means there is a high probability that the social security contributions on capital gains of French property is not compliant with the law of the European Union.
This means that any sale completed on or after 17 August 2012 could have incurred 15.5% on the capital gain which the ECJ is likely to regard as unlawful, and taxpayers in the EU outside France could claim a refund. This includes the 7,000 British nationals estimated to have sold property in France in 2014.
Under these conditions, a claim should be filed as early as possible with the tax authorities to preserve the rights of taxpayers and, should the ECJ decision and/or a change in French legislation be favourable, to obtain restitution of levies wrongly paid.
While it may still be possible in certain specific circumstances to also claim for sales that occurred in 2012, the rules are still unclear and it is strongly advisable to file the claim by 31 December 2014 for sales completed in 2013.
In the examples below, an EU taxpayer not resident in France would be eligible to claim the sum highlighted.
Guillaume Barlet is a London-based French lawyer (independent juriste), consultant and head of the French desk at Cubism Law.