France: French source capital gain & social contributions
French source capital gain & social contributions: new decision favourable to non-French tax residents established in the EEE and in Switzerland.
In a decision dated April 16 2019, the French Supreme Court (Conseil d'État) has just ruled that capital gains realized on French real estate by non-residents affiliated to the social security scheme of a European country other than France (i.e. Member States of EU, Iceland, Norway, Liechtenstein, Switzerland) cannot be subject to the French social contributions for investment products (17.2%). This decision was based on the principle of uniqueness of legistlation laid down in Article 11 of the European Regulation of 29 April 2004.
However, the Article 26 of the Social Security Act for 2019 now provides that persons, whether tax resident in France or not, covered by a social security scheme in the EEE or Switzerland will be exempt from CSG and CRDS on their income from property (property income, annuities for hire, etc.) and investment gains (real estate transfer, movable income, etc.) provided that they are not covered by the mandatory French social security regime. These taxpayers remain liable for the solidarity levy of Article 235 of the CGI, at a rate of 7.5%.
Recall that residents established in and affiliated to the social security regime of the EEE and Switzerland may have the possibility, under certain conditions, to claim for the reimbursement of social contributions paid on the French real estate income (capital gains or rental income) realized from 2016 up to 2018.
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