Brexit: the favourable 7.5% French social security levy applies on individuals as it did before Brexit


French law provides that non-resident taxpayers are subject to social levies on their rents and capital gains they derive from French real estate. Since 1 January 2021, UK residents were no longer entitled to the legal provisions setting a lower rate (7.5% instead of 17.2%) for taxpayers affiliated to the social security scheme of another European Union (EU) or EEA Member State or Switzerland.

However, the French tax authorities have recently stated, in a FAQ about Brexit, that according to the agreements on the exit of the United Kingdom from the European Union (as named in the FAQ) signed on 12 November 2019 and 30 December 2020, this exemption is maintained for those who meet the following conditions:

  • They are affiliated to the British social security system;

  • They are nationals or legal residents of France, the United Kingdom or another Member State of the EU;

  • They are not affiliated to a French compulsory social security scheme.

One may anticipate that taxpayers filing their return will also have to tick the box to be entitled to the reduced rate of 7.5% and to check their subsequent tax notice (generally in September).

The French tax authorities also state that taxpayers who have already “wrongly” paid taxes may get a refund within the time limit for filing a claim. They mention social security contributions on capital gains from the sale of French property (which are paid within the month following the sale).

The taxpayers affiliated to the British social security system should carefully examine the possible claims. In our view, British pensioners in France, and other British, that are French tax resident and not affiliated to the French social security system can also benefit from the rule. As such they may be entitled to the 7.5% instead of the 17,2%, on property and on other type of income if they are subject to the social security levy as French tax residents: dividend for example.