Non-residents, the changes to remember for 2019 !


Each year, 2019 Finance Act as well as the Social Security Funding Act 2019 bring lots of amendments.

To begin spring 2019, some important information regarding taxation for non-resident:

Reduction of social security contributions’ flat rate (European residents (EEE) and Swiss resident)

Social Security Financing Act for 2019 modify social security contributions applicable on capital and other investment income.

As a result, for sales signed as of 1 January 2019, residents of the EEE and Switzerland will benefit from a rate of 7.5% on their real estate gain replacing the overall rate of social security contributions of 17,2%, with the dual cumulative condition of:

  • Do not be affiliated to the French social security system;
  • To be able to prove affiliation to a social security scheme in the EEE or Switzerland.

Claim for reimbursement of social security contributions 2017

Residents of the EEE and Switzerland who paid social security contribution in 2017 (17.2%) on their investment income, have an interest in filing a claim before 31 December 2019 and therefore to respect the limitation period.

Exoneration conditions for real estate gains of non-residents are modified

  • Relaxation of the conditions of capital gains real estate’s exemption, bringing from 5 to 10 years as from the transfer by the salesman of his fiscal domicile out of France, the time before the expiry of which must intervene the cession when the transferor does not have the free disposal of the property at least since January 1st of the previous year.
  • Benefit from real estate capital gain’s exemption: A non-resident who sells the property which was his principal residence in France on the date of the transfer of his fiscal domicile abroad may be exempted from real estate gain on the double condition:
  1. The sale is performed no later than 31 December of the year following the transfer of domicile outside France by the transferor;
  2. The building was not available, free or expensive, between transfer and cession.

Deductibility of alimony pension

The legislator allows non-residents to deduct the amount of alimony pension provided that they are taxable in the hands of a French tax resident and that they did not result in a tax benefit in the country of residence.

Example: A non-resident tax resident who pays child support to another non-resident taxpayer will not be eligible for the deductibility.

Modification of the taxation of non-residents (Possibility to request the application of a lower rate)

As soon as the 2018 income tax is imposed, the tax rate for non-resident French source income is raised from 20% to 30% (or from 14.4% to 20% for income originating in the DOMs) for the portion of net income taxable in France that is greater than the upper limit of the second tranche of the income tax schedule, is 27,519 € in 2018 (CGI article 197 A).

However, when the non-resident taxpayer justifies that the rate of French tax on all of his worldwide income would be lower than these minimums, this rate is applicable to his French-source income.

As of 2018, subject to proof, the taxpayer retains the possibility of claiming the application of the “average rate” of tax resulting from the application of the French progressive scale to all of his French and foreign source income if it is below the minimum rate applicable to non-resident.

For any queries, please do not hesitate to contact our team.

Non-residents, the changes to remember for 2019 !

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