By two recent decisions, the French Administrative Supreme Court has put an end to discrimination between French resident and non-resident regarding real estate owned if France.
The first decision concerns the article 244 bis A of the French tax code (FTC), which creates asurcharge on real estate gains when the seller is a non-resident. A non-resident is subject to a33,33% tax, whereas a French resident has to pay a 19% tax. The Court considered this difference as a violation of the non-discrimination clause of the French-Swiss tax treaty.
The second decision is about article 164 C of the FTC according to which only non-residents aresubject to income tax based on three times the rental value of their French real estate. The Court declared this tax as a violation of the European principle of freedom of capital movements.
These decisions create a right to non-resident to claim for a tax restitution for 2011, 2012 and 2013. Regarding the first situation, it is necessary to check the applicable double tax treaty in order to confirm the presence of a non-discrimination clause.
An other unjustified taxation of non-resident is about to be sanctioned. Real estate gains aresubject to a 15,5 % social contributions. This tax should not be charged to people who do not benefit of the French Social Security system. Therefore, the European Commission opens proceeding against France. Non-resident having paid social contributions on their real estate gains can ask for a tax relief regarding 2011, 2012 and 2013. If the relief is refused by the French tax authorities, non-resident could go before the administrative Court.
CONTACT
Cyril MAUCOUR, Attorney at Law – Tax Partner
[email protected]
96 boulevard Haussmann 75008 PARIS
T. : +33 (0)1 44 29 31 62
F. : +33 (0)1 44 29 32 68
www.ravet-associes.com