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Tax Under Magnifying Glass

Are you a UK resident? Have you sold French Property in the past few years and been forced to pay French social charges on your financial gain? In many cases these social charges may have been greater than the French capital Gains Tax and been deducted by the notaire on completion of sale. Unfortunately, it is not possible to deduct the French social charge against UK capital gains tax (because it is not a “tax” per say) making it a real and unwelcome cost for UK sellers. However, it is almost certain that the French social charge deduction illegal.

A relevant case challenging France’s position on the charges is now before the European Court; Ministre de l’Economie et des finances v Gerard de Ruyter (Case C-623/13). The Advocate General, whose views the Court normally follows, gave his opinion on 21st October 2014, suggesting that France has acted illegally in making these charges on non-residents. It seems very likely the European Court, when it makes its final decision, before end 2014, will take this view as the Advocate General is very clear in his opinion.

This should open the way for UK and other non-French sellers, resident in the EU, to claim back the social charge from the French Fisc.

Sykes Anderson Perry recommend that any UK sellers in this position should write now to both the notaire who dealt with their sale and to the tax agent whom notaires use to calculate the tax, saying that they are aware of the above case and the Advocate General’s opinion and ask for confirmation the deducted French Social charge will be refunded to them forthwith should the court decide they were deducted unlawfully together with interest.

This advice comes from David Anderson, Solicitor Advocate, Chartered Tax Adviser, and barrister (unregistered) at Sykes Anderson Perry Limited Solicitors and Chartered Tax Advisers in London, England. Sykes Anderson Perry tax advisers provide specialist advice on UK and international tax issues, including double taxation treaties, the use of off-shore vehicles and minimising inheritance tax.

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