As we set out in our June 2021 blog post on the effects of Brexit for French CGT on sale for UK residents, the end of the transition period on 31st December 2020 brought some important changes which came into force in 1st January 2021, resulting in much higher rates of French CGT due on sale for British resident sellers.
In a very unexpected turn of events, the French tax authorities amended in January 2022 its Brexit FAQ to set out the fact that British resident sellers would still be able to benefit from the exemption of part of the social charges element, which they had lost at the end of the transition period, bringing back the social charges rate down from 17.2% to 7.5% (the social contributions remaining due, still without the possibility for double taxation relief for any UK CGT paid on a French sale).
Even better, the French tax authorities confirmed that this change would have a retroactive effect, meaning that every British resident seller who completed on their purchase since 1st January 2021 and ended up being liable for the higher tax rate will now be able to claim a refund for the overpaid tax.
While this is excellent news (the French tax authorities not being known for their generosity) there are still some conditions attached to this partial exemption. To benefit from it the British resident seller (1) must not be registered with the French sécurité sociale and (2) must be registered with the British “social security”.
This could potentially cause some confusion at the outset because the UK doesn’t have a social security as such, and therefore how can proof of this be provided to your accredited tax representative or the tax authorities when asking for a refund? It is likely that the “attestation sur l’honneur” (sworn declaration) which was used before Brexit, or a modified version of it without reference to any EU legislation, will still be acceptable proof, rather than having to try and obtain a statement from the DWP that you have been paying your National Insurance (though the attestation does include declarations that such a document is available to the seller), but the early cases and refunds are likely to be subject to a bit of back and forth to ensure that suitable supporting documentation is provided and to avoid the French tax authorities refusing to grant the partial exemption.
