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How do I reduce French capital gains tax on a property sale?

John Kitching of French Law Consultancy answers a reader query

Notaires may hold onto funds to pay any potential capital gains tax liabilities Pic: Jerome LABOUYRIE / Shutterstock

Reader Question: My husband died a few years ago. I sold our French house earlier this year. As I am a UK resident, the no­taire asked for a certificate confirming my affiliation to UK social security or otherwise he had to hold money back to pay capital gains tax. What can I do?

This is a familiar issue when selling a French pro­perty unless it was held solely by the deceased and sold at the same time as dealing with their estate. 

UK residents selling a home can benefit from a low French social charge rate on any taxable capital gains if they provide an HMRC certificate confirming they are not affiliated to French social security.

While waiting for it, the notaire retains money equi­valent to the difference between applying the social charges at the low or standard rates, but usually releases the rest of the sale proceeds minus any tax and social charges to you.

Once the certificate arrives, he or she will release the retained funds to you.

Forms can be found online

I have obtained these using the CA8421 which you can submit online via the Government Gateway (usually the fastest route) or print and post to PT Operations North East England, HM Revenue and Customs, BX9 1AN.

In a covering letter (or the online form), I suggest you quote your NI number, say you sold your French holiday home on date X and the French notary needs the certificate to confirm you were affiliated to UK social security for the UK tax year of the sale, according to conditions in art. SSC 10.3 (c) of the EU/UK Trade and Cooperation Agreement. 

State that no other member state’s social security legislation applied in that tax year and you are still resident in the UK and still liable to the UK for social security purposes.

The form is not ideally worded. I suggest putting the sale date in boxes about start dates, and your explanation where you can.

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Resident or second-home owner in France?
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