Lower charges for non-residents / S1 holders

Historically, there was controversy as to what kinds of income France could levy social charges on for people, including residents, who are affiliated to another country’s social security system.

A 2015 EU court ruling said CSG and CRDS should not be levied on non-professional rental income (furnished or unfurnished) coming from French properties, or property capital gains, for EU/EEA/Swiss residents. The idea was that this group is not a cost to the French health system so should not have to contribute towards it via these charges. Prélèvement de solidarité (7.5%), however, remains payable. 

France argues that the latter, which was created since the court ruling, is only a tax funding general solidarity programmes and this appears to be accepted legally.

People with EU/EEA/Swiss state pensions who live in France with no French pension income but with an S1 form to show they are not a burden on the French health system also qualify and pay just 7.5% on any investment and capital income. They can be patients of the French health system but another country in effect covers the costs.

The Brexit treaties maintained the above rules for UK residents and UK state pensioners living in France who remain attached to UK social security and have an S1 to prove it. You can read what the French authorities say about this at tinyurl.com/bxt-tx-partic. This is protected on the one hand by the Withdrawal Agreement (for Britons who were living in France before Brexit) and by the Trade and Cooperation Agreement, which contains comparable sections for those moving over post Brexit.

English-speaking tax lawyer Laurent Gravelle from Sophia Antipolis said the above would not include people living in the UK who do not work nor claim a UK state pension but who claim a French state pension. He said they should normally have a French S1 for UK healthcare and are seen as a burden on French social security and thus pay CSG and CRDS.

If you have had full charges taken off incomes incorrectly, you can apply for a refund.

Residents of Monaco with French-declarable income do not benefit, as Monaco is not in the EEA.

If you qualify for the above, use box 8SH or 8SI in the 2042C (Revenus du patrimoine exonérés de CSG et de CRDS) to note it. If only one partner in a couple qualifies, there are boxes to complete to show amounts of relevant income for them.

Income from investments (interest, dividends, etc.) goes under capitaux mobiliers. Capital gains from shares go under plus-values de cessions de valeurs mobilières. Rents go under revenus fonciers (after deduction of the micro foncier allowance if applicable).

There is no box for non-professional furnished rental, but this is declared per person elsewhere in the declaration, unlike these other income types.

If you have French bank interest that has social charges deducted at source, check with your bank that CSG and CRDS are not being taken off, if you qualify. You may need to give a sworn statement of eligibility.

Incomes that have had just 7.5% taken off should have been pre-filled in tax declaration box 2DG (but check this).

Note: Under the UK–France double tax treaty, UK rents and government pensions are assessable in the UK, but they must be declared to France as well. This is not to be taxed again, but to be taken into account for other tax purposes.

French tax offices assess these sums for French income tax and social charges, then give a tax credit to cancel out the resulting French tax liability.

The notes to the 2047 foreign income form confirm that this includes the social charges, and in a 2020 ruling, the top administrative court, the Conseil d’État, clarified that it is not necessary that the other country should have comparable levies.

The notes state that “generally speaking… the tax credit is accorded on condition that a tax has effectively been paid abroad”. However, in the case of UK incomes, the treaty wording is that the French resident should be “subject to UK tax in respect of such income”.

The DGFiP confirmed to The Connexion in 2017 that such UK income remains free of French tax and social charges as long as it is of a kind that is not exempt from tax in the UK. They confirmed that this applied even if no tax was actually due because of UK tax bands.

In its 2020 ruling, the Conseil d’État also said the income did not actually have to have been taxed (tinyurl.com/conse-soc).

Laurent Gravelle stated that the same would apply to similar income from the US.

If you have social charges levied on income that should not normally attract them, you may wish to take professional advice.