Good evening, I hope someone will be able to throw some light on this.
Just completed the sale of a small French house with a plus-value, and the Notaire’s office have (correctly) deducted the 7.5% solidarity, but have also taken the 9.7% Prel.Socs making 17.2% in all.
We queried this and supplied copies of S1s , but the response was that this exemption is for EEA/Suisse only, and now no longer applies since UK left in Jan this year.
We are permanent French residents and fully in the tax system.
I’d be very grateful for some help with this - if true could it extend to investment income or even pensions?
My understanding is that it certainly applies to investement income (and always has?) but not to pensions if they are the sort of pensions that the French tax system recognises as such.
As far as I understand (and am willing to be corrected) Brexit has no effect on tax agreements as they have always been handled separately.
However, I’m sure someone with the right references will come along shortly toconfirm the French government position 
Blevins Franks 2020 tax guide:
Social charges are payable at a rate of 17.2% on all investment income, such as interest, dividends and
rental income, and also on capital gains. Individuals holding Form S1 now qualify for a reduced rate
of 7.5% on investment income.
Yes, thank you - that was my understanding also.
The issue is that - according to the Notaire - this has now changed from January this year and the exemption from the full rate no longer applies.
I’m trying to establish if this is correct, and if so, how far-reaching is this change?
This seems to explain the change:
You mention having S1’s so that makes me assume that it was a second home in France and not your principal residence ? The article assumes UK residence.
You are french resident, and french tax resident? With S1’s from the UK? And titres de séjour under the withdrawal agreement?
And not dual tax resident?
If all the above is correct then I don’t see how anything has changed for you! UK residents/UK tax residents after 31/12/2021 are no longer European so not longer have exemption. But you are not a UK resident!
The only thing I can find that might be of use is the attached which sets out what changes - and makes clear it doesn’t apply to you. But I can’t find a more official source…
I think it is saying the change does apply to Brits who are tax resident in France?
Autre conséquence non négligeable du BREXIT : l es résidents fiscaux britanniques ne bénéficieront plus de l’exonération de contribution sociale généralisée (CSG) et de la contribution pour le remboursement de la dette sociale (CRDS) , quand bien même ils justifieraient de la souscription d’un régime de sécurité sociale équivalent au Royaume-Uni comme avant. De ce fait, les résidents britanniques seront soumis aux prélèvements sociaux au taux global de 17,2% et ainsi taxés selon le même mode de calcul que le contribuable français.
In other words, Brits with S1s used to get the special exoneration given exclusively to EU citizens with S1s, but they no longer do.
(I think les résidents fiscaux britanniques means Brits tax resident in France, not tax residents of Britain.)
I’ve read somewhere (will try to find it) that those who are not protected under withdrawal agreement and who are now non-european lose various exemptions, But the OP was here before….
We got our exemption this year, so if it’s ok for income tax then should be ok for capital gains tax.
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Is investment income = capital gains?
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UK issues S1’s to non-UK residents so the OP is France resident. (as confirmed in their post - and continues to be)
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The Buckles article seems to be good news for people going back to UK - or do they then pay UK CGT on the French gain lol…
sounds more like UK tax resident?
The issue then is whether blevins statement 7.5% rate applies to CGT for S1 holders is incorrect?
And S1 is an EU (valid) document - irrespective of issuer? Withdrawal agreement cements social co-ordination EU regulation.
[quote=“JaneJones, post:8, topic:37438”]
We got our exemption this year
[/quote] - Wouldn’t that be for last year 2020 pre Brexit though jane?
Perhaps the OP could ask the Notaire for the legal citations here?
And I’ve made a mental note - before using a notaire check what their calculations / methods / principles / jurisprudence they will apply to the transaction before instructing? - Is that allowed?
There are many simulators around that do that, so easy to do, but they only take the most common scenarios. In theory all notaires should use the same approach in the same area (there are regional differences) as they are public officials working to same rules.
Yes 2020 income, but imposed post the cut-off date. I really don’t think anything changes for withdrawal agreement people at all.
The S1 is an EU wide document.
So, to help further point your notaire to the De Ruyter case - which is the one that created this exemption
And then point him or her to Article 30 and 31 of the withdrawal agreement …… 1. The rules and objectives set out in Article 48 of the TFUE, Regulation (EC) No. 883/2004 and Regulation (EC) No. 987/2009 of the European Parliament and the Council apply to persons covered by this title."
It does not apply to people not covered by the withdrawal agreement so as long as you have your WARP card keep arguing!
Please tell us how you get on as we are in the process of selling a property, and only paying 7.5% rather than full amount would make an enormous difference!!
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Surely rules on 2020 income would be applied as they were in 2020 irrespective of the fact that they were calculated in 2021?
Depends how a cut off date is defined! 2021 taxes applied on 2020 income are normally in accordance with the rules in place for 2021… although some things are backdated. But irrelevant in the case as the key point is that nothing has changed for us in regards exemptions….
Yes of course de Ruyter! Thanks for mentioning that, I should have remembered - I was doing a late rushed reply.
On 2021 rules, I see that the law in place at the ‘imposition’ could make sense, though I might have read somewhere it’s the 2020 budget / law that sets rates for 2021?
Perhaps of interest, I just got my first tax return calculation letter for 2020, just a small amount declared for the December so nothing to pay - which might be strange because I declared some 150 odd euros interest and ticked the box ‘incude / tax at the scale rate’ (not the 30% flat rate).
I wrote in the S1 box on the paper form and of course the Impot have copies.
I would have expected the 7.5% charged on the interest.
Maybe something else is going on here - now I have the TIN, I’ll try to set up on-line access to see in more detail.
PS there’s no sign of Madames tax calc - does the fisc often lose paper forms? (both pushed through the office postbox in person in the same envelope). I got a letter around April asking for passport, last tax form etc which I took down - she never got one.
What was the reason you submitted separate tax returns, is there something particularly complicated about Madame’s situation?
Hi Sandcastle - I’m her concubin - we’re not married! Therefore separate tax forms.
I was wondering where your quote came from
Autre conséquence non négligeable du BREXIT - I tried goggling but couldn’t find it, though found a whole pile of useful stuff, e.g.
para 6 = UK resident france property sale ‘Buckles’ article posted.
I think there is also some confusion on-line e.g. we have this advocat -
Social Security contributions
Since January 1st, 2019 non-resident individuals covered by a social security scheme in an EU or in a country that is part of the EEA or in Switzerland are exempt from French “CSG” and “CRDS” on capital income derived from French real estate assets. They are only liable to a 7.5% levy.
Following Brexit, individuals covered by the UK social security system no longer benefit from this exemption as from January 1st 2021. They are thus subject to the standard French social charges (CSG and CRDS), i.e. a global rate of 17.2%.
which starts with ‘non-resident’ individuals then second paragraph jumps to ‘individuals’ - are we meant to assume the second reference = the first? Coz they are different! Sloppy wording at best…
I found a well written article here dated April 2021
(which undoubtedly many people have seen) which completely bears out @JaneJones points re S1 – including de Ruyter, though not picking apart further any potential contradictions between the EU regulation which (presumably) de Ruyter is based on and the EU and France case law rejecting relief by non-residents from outside of Europe. I assume the EU SS co-ordination regulations remain the ascendent legislation here.
It states
“British nationals who are tax residents of France and in the health system through an S1 on 31st December 2020, will continue to benefit from the exemption from social charges on their pension income, as well as the reduced rate of 7.5% of social charges on their capital income. The same applies to those who later obtain cover through an S1.”
And - “It is highly likely that many errors will occur this year with income tax assessments as a result of tax offices not correctly applying the rule.”
And it has a link to an article specifically on the OP’s problem – with an avocat referenced to fix it!
Evidently the form the Notaire fills in explicitly references the S1 exemption.
Finally I am assuming the OP property is a secondary maison, otherwise the whole thing is exempt as the principle maison? (and they can’t be bothered making it their main residence before selling)
Hi, OP here - what an amazing source of information this forum is!
It is just what I was hoping for - some pointers to find further info on this. There is a lot to read and digest here so I’ll head off and make a start…
Just to clarify - the house is a Normandie ruin. Bought the day before the Grand Tempete of 1999 and as most of NW France needed artisans we had no hope. Took off travelling, found a farm down in the Midi-Pyrenees and have never been back. Sold recently at a distance using same Notaire - who has been very helpful but adamant that exemption no longer applies. All now completed and money sent through so no real hope of recourse there. If it transpires that we do have a case then I guess it’s apply for refund somewhere, but need to get facts rights first…
It came from one of the links in this thread but I have to say looking at it again this morning I think I mis-read it last night, and as another poster says it does mean Brits resident in the UK and not Brits resident in France as for some reason I initially thought.
Re not being charged social charges, one year many years ago I had a very small amount of foreign income from doing a one off consultancy job in the UK that I expected to have social charges levied on but in the event the charges were not collected because the amount was so small. But as I recall, my avis did include the calculation followed by a note that the charge would not be collected.
Cheers - it may well be coz its a small amount, it would only be 11 or 12 euros.
ps I think it was me who posted what the french in the quote meant 
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