France imposes social charges in addition to income tax. British expatriates with a Form S1 benefit from an exemption on UK pension income and a reduced rate on investment income and capital gains – over the years, the S1 could save you thousands in tax.
Newcomers to France soon learn that income is subject to two forms of tax – income tax and social charges. Non-residents may also have to pay this tax, for example if they rent out French property or make capital gains on the sale of local real estate.
Like other French taxes, the rules and rates often change over the years, sometimes for the better, sometimes for the worse. While there were no major reforms for 2026, one of the social charges did increase for certain types of income.
What are social charges?
Social charges (also called ‘social contributions’) are levied on most forms of income in France, in addition to income tax. They are called ‘social’ charges (prélèvement social) because the money is used to finance the French social security. They do not, however, provide health benefits and should not be confused with the social security contributions payable on employment income.
Social charges are made up of four elements, with the rates varying according to the type of income. The rates for 2026 are:
| Salaries | Pensions | Rental income, real estate capital gains, assurance-vie & certain tax wrappers | Interest, dividends and capital gains on shares |
| (on 97% of gross) | (on 95% of gross) | | |
| CSG (Contribution sociale généralisée) | 9.2% | 8.3% | 9.2% | 10.6% |
| CRDS (Contribution au remboursement de la dette sociale) | 0.5% | 0.5% | 0.5% | 0.5% |
| PdS (Prélèvement de Solidarité) | – | – | 7.5% | 7.5% |
| CASA (Contribution additionnelle de solidarité pour l'autonomie) | – | 0.3% | – | – |
| Total | 9.7% | 9.1% | 17.2% | 18.6% |
If your pension income is less than €2,000 per month (€3,000 for a couple), social charges reduce to 7.4%.
The CSG rate applied on capital income increased from 9.2% to 10.6% from 1 January 2026, taking the total social charges rate to 18.6% from the previous 17.2%. However, this increase does not apply to rental income, capital gains on real estate, assurance-vie income and gains as well as income from French tax advantaged savings such as Plan d’Épargne Logement (PEL), Plan d’Épargne Populaire (PEP) and Compte d’Épargne Logement (CEL).
Are UK pensions liable to social charges?
Social charges on pension income are only payable if you receive French health care cover via French contributions. If you have the Form S1 health card, you escape social charges on pension income on the basis that the UK pays for your healthcare in France.
This exemption also applies to pension lump sums – which can be particularly useful for some British expatriates wishing to cash in their pensions, for example, to protect the funds from the UK inheritance tax. Under certain circumstances (so it may or may not apply to you), France offers a beneficial 7.5% flat rate when you encash an entire pension fund. Without an S1 you would also pay 9.1% social charges, but with it total tax is limited to just 7.5%. Take professional advice to establish if your pension would be eligible, and also, importantly, if this course of action would be suitable for you.
What is the reduced social charges rate for property and investment income?
Individuals covered under the health care system of another EU or EEA country are not subject to the CSG or CRDS charges on their investment income or capital gains. This means they just pay the Prélèvement de Solidarité at 7.5% – a tax saving of 9.7%.
Although the UK is no longer an EU member, in 2022 the French authorities officially confirmed that UK nationals with an S1 continue to be exempt from CSG & CRDS social charges on investment income. You can benefit from this 7.5% social charges rate on investment income if you meet either of these conditions:
- You live in France and hold Form S1 and/or are covered by the health system of another EU or EEA country or affiliated to the UK social security system; or
- You are a UK resident (or reside in an EU/EEA country outside France) and earn French source income or gains (eg, from a French property).
If you are eligible, this 7.5% social charges rate applies to:
- Capital gains made on the sale of property
- Rental income
- Investment income – interest, dividends, capital gains made on the disposal of securities like shares, withdrawals from assurance-vie etc.
France’s ‘flat tax’ on investment income
The 30% Prélèvement Forfaitaire Unique (PFU) was introduced back in 2018. It applies to investment income and covers both income tax and social charges. Essentially it comprised the regular 17.2% social charges plus a 12.8% rate of income tax. While often referred to as a ‘flat tax’ the rate does vary:
- 30% is the standard rate applied on rental income, real estate gains, assurance-vie income and gains, and income from PEL, PEP and CEL.
- 31.4% is now applied on bank interest, dividends and gains made on the disposal of share.
- 20.3% applies to anyone with a Form S1, on all types of investment income.
Paying social charges
Social charges are paid in arrears and usually calculated on the income declared in your May income tax return. Each autumn you receive a notification of the amount you owe for the previous year’s income.
For certain types of income/gain (assurance-vie under special rates, real estate capital gains, dividend/interest advance payment etc.), the charges are paid by the 15th of the following month.
Tax planning
When you add social charges to income tax, French taxation can be rather daunting, but France does offer effective tax planning opportunities, particularly on investment income and gains. In any case, with French tax regime being so complex and frequently changing, it is always a good idea to take personalised advice to ensure you are following the rules correctly.
Blevins Franks has tax and wealth management advisers living across France, who can guide you through the local tax regime, and advise on the compliant tax planning opportunities that are available in France, particularly for your investment capital and pensions.
Contact us today and arrange a personalised consultation.
