The exemption from social contributions on French-source investment income continues to apply after Brexit

Following the United Kingdom’s withdrawal from the European Union on 1 January 2021, British nationals receiving French-source investment income (rental income, capital gains on real estate, capital gains on securities, income from movable capital) can no longer pay only the 7.5% solidarity levy, but are now liable for social contributions at the overall rate of 17.2%.

Unexpectedly, the tax authorities recently confirmed, when updating their Brexit FAQ, that the solidarity levy remained applicable to French-source investment income received from 1 January 2021 onwards, provided that the following three conditions were met:

– Being affiliated with the UK social security system,

– Being a national or tax resident of France, the United Kingdom or another Member State of the European Union,

– Not being subject to a mandatory French social security scheme.

This announcement is all the more welcome as it has retroactive effect. British nationals or French tax residents covered by the UK social security system may therefore now file a claim for the refund of social contributions unduly paid, for example following the sale of a property located in France. This claim may be filed until 31 December 2023 for sales made in 2021. Please note that UK residents will have to appoint an accredited tax representative for their sales.