Reclaim French social security charges levied on income from real estate located in France before the end of 2015

30 oktober 2015

Individuals, who own real estate in France may be able to reclaim certain French social security charges for 2013 and 2014 if they are covered by social security in another EU country.

Danish resident individuals, who own a home, holiday home or other real estate located in France, may be among the individuals who are entitled to a refund of French social security charges for 2013 and 2014.

Please note, that the social charges for 2013 must be reclaimed before the end of 2015.

Background

Pursuant to French law, individuals who own real estate located in France - directly or via a tax transparent entity - are subject to social taxes (CSG/CRDS) at a rate of 15.5 pct. on income and/or realised capital gains related to the real estate located in France.

On 26 February 2015, the Court of Justice of the European Union ruled that French social taxes (CSG/CRDS) are in fact social security contributions due to the fact that they are used by the French state to finance the French social security regime.

According to EU law, an individual can only be covered by social security in one EU member state.

This implies that the individual is only required to pay contributions to the social security regime of the EU country where the individual is covered.

Hence, the Court of Justice of the European Union ruled that France cannot apply the above stated social charges to individuals who are covered by the social security regime of another EU member state.

Refund claims

On the basis of the ruling by the Court of Justice of the European Union and pursuant to French tax law, individuals, who are covered by social security in another EU member state than France and who have paid CSG/CRDS on income generated in 2013 and 2014 related to French real estate are entitled to a refund of these unlawfully levied social charges.

As stated above, social charges that have been unlawfully levied for 2013 should be reclaimed by the tax payer before the end of 2015.

The above article is taken from tax:watch, our electronic English newsletter on Danish Tax and VAT matters. tax:watch is issued on the last Friday of each month and is free of charge.