Tax challenges ahead for non-French residents with French letting income
The French tax authorities – known as the “Fisc” – have of course a particular way of going about their work, with departmental tax offices interpreting the law often quite differently.
For example the treatment of rental property income from French properties and the liability to pay social charges is a case in point. It has also been a contentious one! Although the Double Tax Treaties should apply, many tax offices in France are applying French tax law creating a real headache for many non-French residents.
In 2019 the French government stated that non-residents who lived in the European Economic Area (EEA) and who are affiliated to a social security system outside of France were not eligible for social charges. However, instead of levying social charges, « un prélèvement de solidarité » was to be charged at a rate of 7.5% and applied to 2018 income; importantly though this solidarity tax is not defined in law anywhere….
As a result, French letting income will be liable to a charge of 7.5%, being the social charges that do not fund social security system organisations.
The Prélèvement Sociaux (social charges) total 17.2% and apply to non-EEA residents with French rental income. The 17.2% comprises of CSG (contribution sociale généralisée) of 9.2% and CRDS (contribution au remboursement de la dette sociale) of 0.5% plus the PS (prélèvement de solidarité) at 7.5%.
We will be taking a close interest on this because if this is enforced, then what is to stop the Fisc levying this 7.5 % charge on all French residents with income currently exempt from the French social charges, such as pension income, foreign rents, government income, US and Canadian income…?
Please contact us for further information. We are fully authorised to advise on French legal and fiscal patrimonial matters.
Pelican Consulting SARL is a bespoke French-regulated « Conseiller en Ingénierie Patrimoniale » and International Taxation consultancy company, owned by Dr Michael Annett with over 20 years’ experience in France as well as the UK.
Our expertise as wealth management consultants rests in advising on investments and savings, pensions, marital and succession law and international taxation.
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