The tax consequences in France of Brexit for British residents : selling real estate in France
30 December 2020
An increase in social security contributions
When a British resident sells a property located in France, the capital gain is taken into account for income tax (at a rate of 19%) and social security contributions (at a rate of 17.2%). However, since January 1, 2019, individuals who are covered by the social security system of another EEA member state or Switzerland are exempt from CSG and CRDS on income from assets and investment products and are only liable for the solidarity levy at the rate of 7.5% instead of 17.2%. UK residents were concerned by this measure. In the absence of ratification of the General Exit Agreement by the United Kingdom, they will be subject to all social security levies at the rate of 17.2% as of January 1, 2021. As of January, UK residents will no longer benefit from the exemption from the general social security contribution (CSG) and the contribution for the repayment of social debt (CRDS) based on income from assets and investment income, as the United Kingdom will no longer be subject to the provisions of European Regulation (EC) No. 883/2004 on the coordination of social security systems. As a result, income from assets will be subject to social security contributions at an overall rate of 17.2%.
Obligation to appoint an accredited representative.
As of January 1, 2021, the French tax authorities have just confirmed that the United Kingdom will become a third country. As a result, its residents will have to appoint a tax representative for their capital gains on real estate and securities (unless an exemption is granted). To ensure tax representation, the representative will charge a fee to the seller based on the sale price and the complexity of the property capital gain.
It is mandatory to appoint a tax representative in the following situations.
- As soon as the selling price is higher than 150.000 €. This threshold is assessed by joint owner or globally in case of married or pacsed couple.
- As soon as the property has been owned for less than 30 years.
Source : Cabinet ROCHE & CIE