Following the French tax office’s recent change of position over social charges for those with UK links, reclaims are now possible for people who have overpaid.
The change, as reported, relates to a decision that UK residents with French property rental income and capital gains, and UK S1 holders in France with property and investment incomes and gains, remain eligible for a low 7.5% rate of social charges.
This is as opposed to France’s initial analysis last year that UK residents did not benefit because the UK had left the EU and was no longer subject to its social security laws.
This low rate, which usually only applies for people linked to states of the EU/EEA/Switzerland, was confirmed after French officials analysed the Brexit Withdrawal Agreement and the Trade and Cooperation Agreement and decided that their provisions on social security coordination can be treated as equivalent to those that existed when the UK was in the EU.
For example, the treaties mean that EU and British expatriate pensioners can continue to have their healthcare paid for by their home country when they move to each other’s countries. A system of pension ‘aggregation’ also still exists between the UK and EU so that contributions paid in one area are taken account of when a pension is claimed in the other.
The lower social charges derive from European and French court rulings which said the CSG and CRDS charges, which help fund France’s social security system, should not be paid by people attached to another European country’s system and therefore not benefiting from France’s.
This therefore includes residents of other EU/EEA/Swiss countries with rental income from France or capital gains from selling French property, as well as some frontier workers and, notably, pensioners in France whose healthcare is paid for by their home country instead of France.
The officials have also ruled that refunds can be claimed for any overpayments made last year.
The 7.5% that remains is the prélèvement de solidarité. France argues it is different from the others as it does not fund the general social security system.
Who is likely to have overpaid?
The main incomes potentially concerned by the decision are French rental income and chargeable property capital gains (sales of main homes of French residents are not concerned). For residents of France, investment incomes such as interest, dividends and capital gains on shares are also potentially concerned.
Having said this, last year (2021), declarations were made in the spring for 2020 income, in other words relating to income that was received during the Brexit transition period.
As a result of the transition period rules, which maintained the pre-Brexit status quo with regard to the UK’s rights and responsibilities, rental and investment incomes declared in 2021 by people concerned should not in theory have attracted the higher social charges rate.
You may wish, however, to check last year’s avis d’imposition income tax statement to see if that was the case.
Incomes more likely to have been charged at the higher rate and which can now be subject to reclaims include:
Chargeable property capital gains on sales in 2021 (eg. non-residents who sold their French second homes, or residents who sold properties other than their main home)
Investment incomes (bank accounts, assurance vie…) that had PFU ‘flat tax’ taken off at source including 17.2% social charges.
How to claim refunds
You need to make a réclamation (claim) to the relevant tax office.
If you are a non-resident claiming back charges on rental income that would be to the Service des impôts des particuliers non-résidents at Noisy-le-Grand.
If, however, the claim concerns a payment on a property capital gain you should make a claim to the tax office of the area where the property was situated.
If you are a French resident, you should make the claim to your local tax office or to the one where a property was located if property capital gains are concerned.
When writing, you should direct officials towards the information at point five on this page, which confirms the right to refunds, and indicate the amount by which you were overcharged. If possible provide documents showing them, such as an avis d’imposition tax statement or the 2048-IMM property capital gains declaration (ask your notaire if you do not have it).
Possibility to ask for interest?
In past years when refunds of social charges were due following court decisions, lawyers stated it was also possible to ask in addition for interest to be paid from the day the levies were made. It would therefore appear reasonable to make such a request in this case.
You can make your réclamation by lettre recommandée avec avis de reception (registered post letter with receipt slip) or by private messaging in your personal space on the tax website. In the latter case, choose je signale une erreur sur le calcul de mon impôt and then ma demande concerne l’impôt sur le revenu ou les prélèvements sociaux.
Also based on past experience of social charge refund claims relating to the court cases mentioned above, it will help to provide evidence of not being affiliated to French social security, such as a copy of your S1 form if you are a UK pensioner in France.
For UK residents it may help to include any document showing your links with UK social security, preferably dated from the year when the levies were made. This might include payslips showing National Insurance contributions, a document showing you were an OAP or jobseeker, a letter from the DWP etc. Any evidence of being permanently resident in the UK could also help.
It is to be hoped however that, in view of the French officials' clear invitation for refund requests, that they will be flexible in processing these, notably where the levies concerned should already be known to them. For example, in the past, tax officials were instructed by the DGFiP not to reject claims which lacked a precise figure, especially where the figures could be readily checked.
You can claim a refund up until the end of the second year after the one in which the social charges were paid, eg. for property capital gains on sales last year, to the end of 2023.