Non-residents outside Europe spared property capital gains social charge increase
Non-residents living outside Europe have been spared an unexpected increase in social charges on French property capital gains, authorities have confirmed. These sellers will continue to pay charges at the previous rate of 17.2%, rather than the 18.6% that many tax experts had anticipated.
The clarification comes after the 2026 Social Security Financing Law (LFSS 2026), published in the Official Journal on December 31, 2025, raised the main social charge known as CSG from 9.2% to 10.6% on certain types of income. While this increase applies to investment income such as dividends and interest, French tax authorities have confirmed that property capital gains remain exempt and continue to be charged at the previous 9.2% CSG rate.
Laurent Gravelle, a tax lawyer based in Sophia-Antipolis in the Alpes-Maritimes, reported that the authorities are now allowing non-residents to maintain the lower rate, contrary to widespread expectations among property specialists. Many experts had interpreted the wording of the exemption clause in the 2026 law as applying only to French residents, which would have left non-residents from countries outside the EU, EEA and Switzerland facing the higher charge.
Constitutional principles prevent discriminatory treatment
The situation appeared particularly inequitable because non-residents do not benefit from the French social security system that CSG contributions help fund. The Constitutional Council validated the provisions of LFSS 2026, and official social security bulletins have now clarified that the exemption applies to all non-residents based on constitutional principles of equality.
Gravelle, who had previously flagged the complication as both unfair and illogical, told The Connexion that the position has been definitively stated in point 10 of an official social security bulletin. He noted it seemed to be an unintended consequence of how the law was drafted.
Different rules for EU and non-EU residents
The treatment of non-residents varies depending on their country of residence, largely due to a landmark 2015 European Court of Justice ruling. In the De Ruyter case (C-623/13), decided on February 26, 2015, the court ruled that French social charges on unearned income paid by EU residents affiliated with another member state's social security system were discriminatory under EU Regulation 883/2004.
As a result of this precedent, non-residents in EU and EEA countries, as well as Switzerland, do not pay CSG or the similar CRDS charge (0.5%). They pay only 19% capital gains tax plus 7.5% of another charge called prélèvement de solidarité (PDS), totalling 26.5% in tax and charges. The 7.5% solidarity levy continues to apply to all non-residents because it is allocated to the French state budget rather than the social security system.
UK residents benefit from similar treatment to EU/EEA residents due to post-Brexit agreements. However, non-residents elsewhere, such as those in the United States, do not fall under the De Ruyter rules. It was these non-EU residents who were thought to face a total of 37.6% in tax and charges (19% CGT + 7.5% PDS + 0.5% CRDS + 10.6% CSG), before the recent clarification.
By comparison, French residents pay 19% capital gains tax plus 7.5% PDS, 0.5% CRDS and 9.2% CSG, totalling 36.2% in tax and charges on second home sales. Main home sales are exempt from these charges for residents.
Main home exemptions for departing residents
Some non-residents benefit from complete exemption from capital gains tax and social charges on their former main home if they move abroad, provided certain conditions are met. If the non-resident moves to an EU country or a state with a mutual agreement with France on fighting tax fraud and evasion (such as the UK or US), they must sell by December 31 of the year following their departure from France, and the property must not have been rented out.
EU citizens leaving France can also be exempt from up to €150,000 of net taxable capital gain for a period of 10 years on properties they cannot use, such as those that are rented out, or at any time if they have had use of the property at least since January 1 of the year of sale.
