French tax refunds

There has been a fair amount of discussion recently about possible French tax refunds relating predominantly to people who are not French resident but have sold French property, and also to French income tax paid by non-residents.  A number of articles have appeared in the British press on this question.

This relates to sales of French property that have taken place since 16 August 2012 or to French income tax payment by non-residents after 2011.  Those taxes have attracted an additional contribution to social charges, amounting to an extra tax of around 15.5%.

It is generally accepted that such an imposition of social charges is contrary to EU law, and France is therefore in breach.  That has not yet however been confirmed by the European Court of Justice (ECJ).  Nevertheless, there are strict time limits under French regulation for any claim for reimbursement to be lodged.  Those wishing to seek reimbursement should ideally do so before the end of December 2014.  It is possible that sales having completed this year could still qualify for a reimbursement if the request is submitted in 2015, although there is a little confusion on this point.

For non-French residents, that claim could be filed with the tax office local to the property, or to the non-resident tax office in Noisy-le-Grand, near Paris.

However, there are a number of points of potential concern.

First, a claim should be submitted with an address for service in France.  Thus an application could be lodged via an avocat or notaire, or via the Fiscal Representative company if one was instructed on the sale.

Secondly, at least one Fiscal Representative company has suggested that it would require to submit all such claims on behalf of its clients, and any application made independently would be in breach of their contract terms.

It appears that for the moment at least, an application for reimbursement will be rejected out of hand by the tax authorities.  That may change should the ECJ hand judge a ruling against France.  It is suggested, though, that any application for reimbursement is likely to trigger a detailed tax inspection, by virtue of which the tax office could analyse in detail whether any further capital gains tax should be payable.

For individual advice, please contact Matthew Cameron on 01284 727016 or email matthew.cameron@ashtonslegal.co.uk

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