Non-residents—that is, French citizens and foreign nationals who are tax-domiciled outside France and have income from French sources—are subject to a special tax regime. The 2019 Finance Bill proposes to amend the terms of this regime. Overall, the announced measures are aimed at simplification.
Abolition of the CSG-CRDS for property income
Currently, taxpayers residing abroad who have property income from French sources are subject to the CSG-CRDS. However, they do not benefit from the tax protection financed by these levies.
[arm_restrict_content plan=»22,21,17,15,» type=»hide»] [armelse]The government has decided to comply with European law regarding social security contributions for non-residents. Accordingly, the Minister of Public Action and Public Accounts announced the elimination of the CSG-CRDS on the income of non-residents if they are enrolled in a social security system within the European Union or in Switzerland.
Please note
For other non-residents, social security contributions will remain in effect. Taxation could even be increased to offset the loss of revenue.
Real Estate Sales: Relaxation of Exemption Rules
If they sell their primary residence, taxpayers leaving France will have their capital gains exempt from income tax and social security contributions, just as residents are. However, they must meet two conditions:
In addition, capital gains realized by a non-resident upon the sale of real estate located in France are currently exempt from tax on the portion up to €150,000 if the following conditions are met:
The 2019 Finance Bill proposes to extend this period from five to 10 years.
Withholding tax applicable to nonresidents
A minimum tax rate of 20 % will no longer apply to French income earned by non-residents. In fact, the withholding tax rate schedule for income tax (IR) is expected to take effect on January 1, 2020. However, as an interim measure, the minimum tax rate will increase from 20 % to 30 % in 2019.
Tax Benefits Available to Nonresidents
According to the proposal unveiled by the Minister of Public Action and Accounts, non-residents will be able to take advantage of the Pinel rental investment program, which provides a tax deduction for the purchase of real estate. Similarly, they should be able to take advantage of the tax deductibility of alimony payments (made to a resident).
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