Loading...

French social charges on investment income have been reduced from 17.2% to 7.5% for many expatriate retirees and non-residents.

Following on from last year’s tax reforms, there is more good news for French taxpayers. This time it relates to social charges, particularly for retirees and investment income.  It also affects non-residents who receive income from France.

These changes form part of the Social Security budget for 2019, which was approved towards the end of December, and could potentially be very beneficial.

General social charges rates for 2019

The main rates remain the same as 2018, and are therefore as follows:

   

SALARIES AND UNEMPLOYMENT BENEFITS  (on 97% of gross)  

RETIREMENT OR DISABILITY PENSIONS  (on 95% of gross)  INVESTMENTS, ANNUITIES, RENTAL INCOME AND CAPITAL GAINS      
CSG  (Contribution sociale généralisée) 9.2% 8.3% 9.9%
CRDS  (Contribution au remboursement de la dette sociale) 0.5% 0.5% 0.5%
PS  (Prélèvement Social)  0% 0%   4.5%
CA  (Contribution additionnelle) 0.3%
PdS  (Prélèvement de Solidarité) –  2%
CASA  (Contribution additionnelle de solidarité pour l'autonomie) 0.3%
TOTAL 9.7% 9.1% 17.2%


 
As before, you are exempt from social charges on your pension income if you have the EU Form S1 or you are not subject to the French health care system (so you are not paying cotisations sociales or PUMA contributions).

New lower rate for investment income

Individuals covered under the health care system of another EU or EEA country are no longer subject to CSG or CRDS on their investment income or capital gains.  Instead they now pay a new Prélèvement de Solidarité at a flat rate of 7.5% - a tax saving of 9.7%.

You can benefit from this new 7.5% social charges rate on investment income if:

  1. You hold Form S1
  2. You are a non-resident of France earning French source income (rental income, capital gains on the sale of a French property etc) and are covered by the health system of another EU/EEA country.

 

For investment and passive income, such as bank interest, dividends, withdrawals from assurance-vie etc, this applies from 1st January 2019.

However, for capital gains on the sale of securities like shares, capital gains on the sale of real estate, and rental income deriving from unfurnished properties, it applies from 1st January 2018.

You can submit refund claims for any charges paid at the higher rate during calendar year 2018.  If this applies to you, speak to your accountant about submitting a claim.

Note that the flat tax on investment income – the Prélèvement Forfaitaire Unique (PFU) – that was introduced from 2018 continues to apply this year.  The rate is 30% and includes both income tax and social charges.  It also applies to assurance-vie policies set up after 26th September 2017 for investments over €150,000 per individual (i.e. €300,000 for a joint investment for a married couple / PACS partners). Households in low-income brackets keep the option for progressive income tax rates plus social charges (either 17.2% or 7.5% if eligible, as described above).

Reduced rate for low pension income

For those who do not escape social charges on pension income, the normal 9.1% rate has been reduced to 7.4% (as applied in 2017) for those in receipt of pension income of less than €2,000 a month, or €3,000 for a couple.

Tax planning

This is a good time to review your tax planning to make sure you are taking full advantage of the 2018 tax reforms and the new social charges rate for investment income.  Contact your local Blevins Franks adviser for more information and personalised, specialist advice.

The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual is advised to seek personalised advice.