European residents: only two months left to claim a refund of social security contributions paid in 2018

27/10/20
European residents: only two months left to claim a refund of social security contributions paid in 2018

Residents of European countries (other than France) have until 31 December 2020 to claim the refund of the social security contributions they paid in respect of the capital gain realised on the sale of a real-estate property located in France in 2018.

  As a reminder, French case law[1] ruled that these European residents are not subject to French social security contributions pursuant to the Treaty on the Functioning of the European Union.   To date, our European clients for which we have filed claims for refunds have all been reimbursed.  

Example:

Mr and Mrs X, both residents in Germany and affiliated to the German social security system, sold their villa located on the Côte d'Azur in 2018. They realised a capital gain of € 500,000 (after application of the deduction for holding period).   This capital gain was subject to total taxation in France of € 181,000, which breaks down as follows:
  • € 95,000 in income tax (at a rate of 19%), and
  • € 86,000 in social security contributions (at a rate of 17.2%).
Unless otherwise specified below, Mr and Mrs X are entitled to file a claim to obtain a refund of the social security contributions paid, i.e. € 86,000.    
   

KEY POINTS TO REMEMBER:

  Who can obtain the refund of social security contributions? All individuals who were affiliated in 2018 to the social security scheme of a European Union Member State (other than France) or affiliated in Switzerland, Iceland, Norway or Liechtenstein.   How much can be claimed? A claim can be made for the reimbursement of all the social security contributions paid, which represent 2% of the capital gain on the sale (after application of the deduction for holding period).   Until when can the refund be claimed? A claim for restitution can be submitted to the French tax authorities until 31 December 2020. After this date, the year 2018 will be statute-barred and it will therefore no longer be possible to claim a refund of social security contributions paid in 2018. As a reminder, the years prior to 2018 are already statute-barred.  
  Our law firm proved its expertise in the field of international real estate taxation by denouncing, 10 years ago, the non-compliance with the European Treaty of the 33.1/3% levy (French tax code, art. 244 bis A), which at the time was specifically applicable to residents of third countries. Following a large number of administrative court rulings, all favourable to our clients, this 33.1/3% levy was abolished as of 1st January 2015.   [interne id="43415"][interne id="43234"]     [1] Administrative Court of Appeal of Nancy, 31 May 2018 (https://www.legifrance.gouv.fr/ceta/id/CETATEXT000037039702/) and 4 July 2019, no.°17NC02124
To go further