United Kingdom and Brexit
Situation with regard to social security contributions on income from assets.
Summary table for EEA, UK and Swiss residents
The French legislator requires residents of France to pay social security contributions on
- income from movable capital,
- capital gains on the sale of securities,
- income from property,
- capital gains on immovable property.
These social security contributions, at an overall rate of 17.2%, can be broken down as follows:
- General social contribution (CSG) at a rate of 9.2%;
- Social debt repayment contribution (CRDS) at a rate of 0.5%;
- Solidarity levy (PS) at a rate of 7.5%.
Non-residents of France are only subject to social security contributions on
- property income from French sources,
- capital gains on immovable property from French sources[1].
The social security finance act for 2019 exempted persons covered by the social security scheme of another Member State of the European Union (EU), the European Economic Area (EEA) or Switzerland, and who are not subject to a compulsory French social security scheme, from CSG and CRDS, but not from the solidarity levy. This was done to put an end to a controversy concerning the conformity of the scope of French social security contributions with Community law.
Since British residents are no longer covered by the compulsory social security system of an EU State following Brexit, this has raised the question as to whether they are subject to all the social security contributions for their income and capital gains arising from property.
The General Directorate of Public Finances provided an answer to this question in January 2022[2].
- Since 1 January 2021, UK residents no longer fall within the scope of the CSG and CRDS exemptions.
- However, the exemption still holds for income and capital gains from property received by residents of the United Kingdom who are covered by the British social security system and who are not subject to a compulsory French social security scheme.
Summary table: social security contribution rates
| Income subject to social security contributions | Residents of France | Residents of the EEA (countries other than France) * | Residents of the United Kingdom after Brexit
1 January 2021** |
|
| Income from movable capital | 17.2% | Not applicable
(therefore 0%) |
Not applicable
(therefore 0%) |
|
| Capital gains on the sale of securities | 17.2% | Not applicable
(therefore 0%) |
Not applicable
(therefore 0%) |
|
| Income from property | 17.2% | 7.5% | 7.5% | |
| Capital gains on immovable property | 17.2% | 7.5% | 7.5% | |
| * Covered by a compulsory social security scheme of an EEA country (other than France) or Switzerland
** Covered by the British social security system and not subject to a compulsory French social security scheme |
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Income from property and capital gains on immovable property linked to French real estate held by British residents are therefore only subject to the solidarity levy at the rate of 7.5%.
Residents of the United Kingdom who have already erroneously paid taxes may request a refund of the excess amount paid until 31 December of the second year following the notice of assessment.
Lastly, the assimilation of British residents to residents of the EEA on the issue of social security contributions does not in any way extend to an exemption from the obligation to use an accredited tax representative. Unlike residents of the EEA, a British resident who sells real estate located in France will therefore have to appoint an accredited tax representative, who will be responsible for paying the immovable property transfer tax[3].
Auteurs : Pascal JULIEN SAINT-AMAND, Eugénie GUICHOT, Althémis, Paris
[1]Article L. 136-6, I bis of the Social Security Code
[2]https://www.impots.gouv.fr/sites/default/files/media/1_metier/5_international /brexit/20220114_faq_brexit_nid_13662_particuliers.pdf
[3] Annex II, Article 171 quater of the French General Tax Code
