Capital Gains Reduced for Non-European Residents
Tuesday 03 February 2015
The rate of capital gains tax in France has been substantially reduced for those who live outside of Europe.
Last month we reported on a ruling of the French Supreme Court (Conseil d’État) that the imposition of a higher rate of capital gains tax on those who lived outside of the European Economic Area was discriminatory and therefore illegal.
Until now, such individuals have been taxed at the rate of 33.3%, whilst those from within France and the EEA are taxed at 19% (plus social charges of 15.5% in both cases).
Following the court decision, at the end of last year the government introduced a last minute amendment to the Loi de Finance Rectificative 2014, which now harmonises the rate at 19% for everyone, irrespective of their place of residence.
The law proposed that those resident in a tax haven deemed 'uncooperative' by the French government (Botswana, Brunei, Guatemala, Marshall Islands, British Virgin Islands, Montserrat, Nauru, and Niue) would continue to remain liable at the rate of 75%.
However, this rate was subsequently declared illegal by the Constitutional Court, because when the social charges of 15.5% were added they considered a tax rate of 95.5% to be excessive.
The new rate applies to all individuals, whether or not the property is owned through a French property company (Société Civile Immobilière - SCI), but it excludes corporate bodies taxed through the system of company taxation.
The new uniform rate applies from 1st January 2015.
There has been no announcement by the government on a retrospective rebate for those who previously paid at the higher rate.
However, given that the court ruling occurred in 2014, it means that those imposed at the higher rate in 2014 may be entitled to a refund of overpaid taxes.
Such a reimbursement may only be obtained on specific demand, and those who wish to join the claim we have made on a collective basis, under the auspices of a professional firm of specialist advisors, should contact us at email@example.com.
The ECJ has yet to make a ruling on the legality of social charges on the property income and capital gains of non-residents but we shall post further news when the judgement is known.