Recent news regarding French social security payments (prelevements sociaux)

Friday, 16 November, 2018

Here is some good news with regard to the payment of Prelevements Sociaux , currently the UK equivalent of social security payments paid to the French Tax Office, in relation to gains from the sale of a French property; French rental income or income and gains as a French Tax resident .

The Projet Loi de Financement de la sécurité sociale article 19 aims to change the way Prelevements Sociaux tax is collected and where it goes.

CSG is being reduced from 9.9% to 9.2%.

CRDS is staying at 0.5%.

Meanwhile Prélèvement social (4.5%) and contribution additionnelle au prélèvement social (0.3%) are being stopped.

Prélèvement de solidarité (2%) is being increased to 7.5%.

If the above changes are adopted as presented, (note for now the legislation is still in Bill form), the new breakdown from 2019 would be as follows:-

CSG 9.2%
CRDS 0.5%
Prélèvement de solidarite 7.5%

Total 17.2% - which is the same as today.

However:

CSG and CRDS will not be chargeable if the taxpayer can show that they are subject to national insurance legislation of another EEA member state (or Switzerland) other than France. Those falling into this category will benefit from prelevements sociaux being reduced to 7.5%

This lower rate is unlikely to be able to be challengeable because the funds raised will be paid into the general State budget as with any other tax – i.e. no more hypothecation for application to the social security budget. Consequently, now taking the form of a tax rather than a social security levy, it should be possible to claim the charge as a credit against UK tax on the same income or gains, (via TIOPA (Taxation [International and Other Provisions] Act 2010)

This good news may only be on a temporary basis for the British National, depending on the outcome of BREXIT:-

The situation Pre- Brexit:

Those who qualify will therefore only be liable to Prelevements Sociaux at 7.5% and will be able to claim this as a tax credit in the UK

The situation based on a hypothetical hard Post Brexit

People will have to pay Prelements Sociaux at 17.2%, of which 7.5% will be able to be claimed as a tax credit and 9.7% as a deduction against revenue.

The situation based on a hypothetical soft Post Brexit

(Soft – meaning the UK still participates in regulation 883/2004 and related Regulations)

Those who qualify will only be liable to Prelevements Sociaux at 7.5% and will be able to claim this as a tax credit in the UK.

For more information on how Charles Hamer can administer your French tax obligations and obtain CSG and CRDS exemptions going forward ,or recover Prelevements Sociaux already charged since 2016 on your behalf , please contact Emilie Mengin via info@charleshamer.co.uk. Tel 00 33 2 31 97 80 72 .

Abbreviations

CSG = Contribution Sociale Généralisée
CRDS = Contribution au Remboursement de la Dette Sociale