Tax rebates for Britons with second homes in France
BRITISH taxpayers who own property in France will be able to claim back thousands of pounds in overpaid duties, in a post-Brexit windfall.
The French tax authority said it will reverse post-Brexit tax rises applied to foreigners. Some second home owners could receive £20,000 from French authorities, experts said.
However, British citizens face a battle to retrieve their money. François Mounielou, of Druces LLP, a legal firm, said the tax authority has a Covid backlog and there could be a two-year wait.
A British taxpayer with a holiday home that generated €10,000 (£8,349) in rental income last year will have overpaid €970 in tax which they can now reclaim. The rebates on capital gains will be even bigger. A British citizen who bought a second home in France for €250,000 in 2012 and sold it this year for €350,000 can now claim €8,900 in overpaid social charges on their profits.
Before Brexit, taxpayers living in the UK who owned property in France typically paid French social charges at 7.5 per cent – a reduced rate compared to French taxpayers rate of 17.2 per cent.
‘It may encourage British owners to sell in a buoyant market given the high level of international demand’
This followed a 2015 EU ruling that people should not pay full French social charges if they were paying taxes to another EU social security jurisdiction.
Since Jan 1 2021, when the Brexit transition period ended, British taxpayers were no longer covered by the 2015 EU ruling. Their social charge tax bills in France duly jumped by nearly 10 percentage points to 17.2 per cent.
But last month, the French tax authorities published administrative guidance that the terms of the postBrexit Trade and Cooperation Agreement essentially matched the EU terms, and therefore British taxpayers who own French property should pay only the reduced 7.5 per cent rate.
House price growth means taxes on French home sale profits ballooned last year. In the year to December 2021, French property values rose 7.1 per cent. For houses, the jump was 9 per cent. Residential rents increased by 1.6 per cent across the same period.
Jack Harris, of Knight Frank estate agents, said: “The tax cut may well encourage some British owners to sell in a buoyant market given the high level of international demand we’re seeing in prime destinations such as the Côte d’Azur, Provence, and French Alps.”