The Empire Strikes Back- Social Charges to be reintroduced for non-residents !

This is not going to be welcome news for non-resident owners of French property who have rental income, or more specifically those who make a profit.  Social Charges,  which are known as Contributions Sociales or Prélèvements Sociaux, are to be reintroduced for the tax year 2015 onwards.

Social Charges, which currently amount to 15,5% of taxable income, were introduced for rental income by non-residents from the tax year 2012 onwards. After a ruling by the European Court of Justice in February 2015 that these charges were illegal because they were Social Security contributions applied to people who would be gaining no benefit from the French Social Security system, the French goverment was  passed a law in July 2015 withdrawing these charges for non-residents and accepting applications for the amounts paid for the years 2012 and 2013 to be refunded.

However, in the Finance Law passed on 1st January 2016, Social Charges are being introduced, supposedly “in agreement with the European Commission” . The French government is claiming that this is legal because the contributions will go towards the general government budget and not specifically towards Social Security. Here is an excerpt from some recent communication that we have had from the Tax Office:

“A noter que l’application des prélèvements sociaux sur les revenus 2015 pour les non résidents est reconduite. Conformément à la loi de finance du 01/01/2016 et en accord avec la commission européenne, l’application des prélèvements sociaux est maintenue pour les non résidents mais financera le budget global de l’État et non la sécurité sociale. “

Whether this will be challenged again in the European Court of Justice waits to be seen, but whatever happens it will be a long process. In the meantime, those renting out their property in France will be faced again with a total tax payable of 35.5% of any profits they make.

Not happy reading.

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