Rebates for UK Owners of French Property

Rebates for UK Owners of French Property

Before Brexit, taxpayers living in the UK who were liable to the French social charge  paid  a reduced rate of 7.5% (normally 17.2%) on their French real estate income and capital gains.  This arose  under the EU Directive on the coordination of social security systems which generally applies to those who are tax resident outside of France, although it may also be applicable to French residents who are affiliated to the NHS.

Due to Brexit, the Directive no longer applied to UK residents with effect from 1 January 2021. Consequently, French tax offices, and advisers applied the increased 17.2% rate to UK residents.  Unsurprisingly this triggered a strong backlash in the UK.

On 30th December 2020, the EU and the UK announced the terms of the post-Brexit Trade and Cooperation Agreement which included new  rules on social security coordination between the EU and UK.

In an unforeseen U-turn, French tax authorities decided that  the rules in the Trade and Cooperation Agreement essentially mirrored the rules  in the EU Directive, and therefore reverted to the reduced social charge rate of 7.5% for UK taxpayers. The French tax authorities published their administrative guidance on this last month to confirm these welcome changes,

UK taxpayers who received rental income from a French property, or sold one in 2021, are now able to claim a tax refund for the additional social charges unduly paid. Taxpayers who believe they are eligible to make a claim have until 31st December 2023 (or until 31st December 2024 in respect of rental income), to lodge a claim with  the French tax authorities.

Please note this article is for general information. You should not rely on it without advice on the specific facts of your case.

Our UK based French tax experts specialise in such French/UK issues; including taxation, wealth tax, succession, real estate etc. They have  extensive knowledge of French tax, please contact us for more details.