Monday, 28 March 2016

Monday, 28 March 2016

Capital Gains and other taxes

CGT – Social Charges & more (illegal charges)

After several legal challenges, a decision in the EU Court (de Ruyter) France has confirmed that the deducted social contributions levied as part of the Capital Gains Tax calculation to non-French residents would now be refunded (BUT with a deduction of 2% (prélèvement de solidarité) which France views as not within the EU ruling. In other words 13.5% will be refunded, and these refunds are being made now. Several of our clients have successfully followed this required process. It rather upholds our view that this was an illegal tax.

Now on to the next stage : Refund of Tax Agents fees

Many sellers were required to have a fiscal representative to calculate the gain (or loss). This cost was typically 1% of the sale price regardless of the gain made. This was required until 31st December 2014 when the law was changed following an EU case which decided this breached the free movement of capital within the EU. In other words, the French Government were making an illegal charge (again).

The French Government is currently refusing to reimburse sellers’ costs in appointing such a tax agent to calculate and to guarantee the sellers’ capital gains tax liability. Our view, and that of other professionals is that these fees should be refunded as they were required by French law in breach of EU law.

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