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This page is intended to keep our nonresident contacts informed of pertinent legislative developments or new legal precedents concerning international affairs which may impact their operations and require preemptive action.

Published on Wednesday 02/11/2016

French decree no. 2016-567 of 10 May 2016 created, via Article 1649 AB of the French Tax Code, a "public register of trusts", with the aim of achieving transparency and combating tax fraud and evasion (particularly by preventing use of dummy corporations). The conditions for implementing the register were stipulated by an order of 21 June 2016. An interim order of the Council of State and a recent decision by the Constitutional Council have put an end to this system before it became fully operational.


The legislation sought to compile a register of trusts when one of the elements of the common law mechanism was in France, i.e.:

- the parties if at least one of them (trustee, settlor or beneficiary) had tax residency in France;

- the object of the trust if it included an asset or right located in France.


The public register of trusts was supposed to contain the following information:

- name and address of the trust;

- date of establishment and end date of the trust;

- date and nature of the trust declaration mentioned in Article 1649 AB of the French Tax Code;

- and information identifying the three parties to the trust (settlor, beneficiary and trustee).  


The register was supposed to go online on 5 July 2016. By an order of 22 July, the Council of State suspended implementation of the decree (and thus the creation of the register), based on the risks of infringing the privacy of the applicant given that the register could allow public access to personal data (such as testamentary intentions).


The Constitutional Council to which a QPC (question on the conformity of a law with the Constitution) had been submitted at the same time, handed down a decision on 21 October 2016, considering that the public register of trusts as planned by the legislative provisions was unconstitutional. Although the register pursues the constitutional objective of fighting tax fraud and evasion, the lack of limitation on the group of people who would have access to it "restricts [the right to privacy] in a way that is manifestly disproportionate to the objective pursued". As a result, the decree was immediately repealed.


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Tags : Trust Taxation

Published on Thursday 20/08/2015

By its decision of 27 July 2015 No. 334,551.20150727, the Conseil d'Etat comes into line with the decision of 26 February 2015 of the ECJ that the persons affiliated to a social security scheme in a Member State of the European Union can not be subject in France to social security contributions on income from property


In this case, an employee of a Dutch company affiliated to the social security scheme in the Netherlands, living in France, was imposed by the French tax administration to social security contributions on income from the Dutch source heritage, compounds salaries, investment income and annuities received between 1997 and 2004.


Thus the Conseil d'Etat, in turn, ruled that in respect of a taxpayer resident in France but affiliated to a foreign social security scheme, it must be applied the principles arising from the European Regulation No. 1408/71 of June 14, 1971 (which replaces by  the Regulation 883/2004 of 29 April 2004 with effect from 1 May 2010). This regulation provides that employed and self-employed within the European Union are subject to the social security scheme of a single Member State. The regime applicable is that of the Member State where the applicant operates.


Citizens of the European Union and the European Economic Area who wrongly paid social security contributions on income from assets (including property income, life annuities for value, gains on sale of securities and corporate rights ) or investment income (including real estate gains and investment income) can form a rebate application with the tax authorities where they have paid the payment of their contributions. It will be carried under the provisions of Article R196-1 of the Book of Tax Procedures, that is to say before 31 December of the second year following the year of collection development (unearned income) or during which the withholding taxes and levies were operated (investment income).

They also may obtain default interest per month of delay due to the date of repayment.


Concerning nationals of Switzerland, they can make a claim for relief under the same conditions as nationals of the European Union since Article 90 of Regulation 883/2004 of 29 April 2004 plans to maintain the benefit of Regulation prior to agreements between Switzerland and the European Community and its Member States.


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Tags : Taxation

Published on Tuesday 18/08/2015

In a judgment of 26 February 2015, the ECJ decided that the CSG and CRDS are social security contributions and not taxes. Therefore, they fall within the scope of Regulation EC No 1408/71 and must therefore be recovered in the State where the taxpayer makes contributions to a social security scheme.

Thus, foreign nationals residing in France who contribute to a foreign social security scheme are not liable to social security contributions on their income from assets in France.  Thus, they are entitled to obtain reimbursement through  claim  under Article R196-1 of the French LPF which must be filed before the December 31 of the second year following the payment of levies. Therefore the deadline will expire December 31, 2015 for deads signed in 2013, on December 31, 2016 for deads signed in 2014 and 31 December 2017 for deads  signed in 2015.

If France has taken note of the condemnation in a press release dated February 26, 2015, the fact remains that the French Government intends to take no action before the Conseil d'Etat has ruled on the basis of that decision. The Conseil d'Etat agreed with the ECJ on July 27 th 2015. The update will be published when the government has issued position. 


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Tags : Taxation

Published on Monday 27/07/2015

The Conseil d'Etat (Administrative supreme court) confirmed on April 17, 2015, the decision ruled by the European Court of Justice on February 26th, 2015.


In this case, a French citizen living in Guyana had been subject to social contributions (CSG and CRDS)on a real estate capital gain. The latter opposed the tax based on the provisions of EU Regulation No. 1408/71 of 14 June 1971, which establishes the principle of the uniqueness of the affiliation to a social security scheme and so that a levy contributions entering the required field of a social security scheme should have a direct link and relevant connection between the levy and the social security system. But the taxpayer was not subject to a social security scheme. Hence social contributions were devoid of any connection with that regime.


The Administrative Court of Appeal of Bordeaux had qualified these contributions of “unclassified charges” and not “social security contributions”. Therefore, it considered that a person who has paid these contributions could not obtain a refund.


The Conseil d'Etat cancelled this ruling, on the grounds of the European regulation n° 1408/71 of June 14th, 1971 and the decision ruled by the European Court of Justice on February 26th, 2015. By considering that the CSG and the CRDS are within the scope of this European regulation, the Conseil d'Etat exempts people who are not insured under the French social security scheme from these two social levies.


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Tags : Sale Apartment Taxation

Published on Monday 05/01/2015

In its judgment of November 20th, 2013 (n°361167) the Conseil d’Etat (French Administrative Supreme Court) ruled that the 33% rate resulting from the Article 244 bis A of the Code général des impôts (French Tax Code) is not compatible with the French-Swiss Tax treaty which contains a clause of equal treatment regarding the assessment basis and the taxation rate.


It confirms that Capital Gains resulting from the sales of real properties realized by Swiss residents in France benefit from the reduced income tax rate of 16 % (now 19% ) applying to French residents.


At the time this judgment was delivered , the French Conseil d’Etat had not yet explicitly ruled on the incompatibility of the tax rate of 33% for real estate capital gains with the provisions of European Community law constitute an obstacle to the free movement of capital raised by the TFEU (Treaty on the Functioning of the European Union). Indeed, all unjustified restrictions on free movement of capital between States Members of the EU and third countries are prohibited.


See our article on the condemnation of the tax rate of 33% real estate capital gains of non-residents


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Tags : International tax law Taxation Sale Apartment

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The interdisciplinary expertise of the Selarl Bruno Bedaride, notaire in Paris covers the following areas: corporate law, international contracts law, legal and tax advice, advice for international transmission, real estate law, family office, real estate and company finance law. We offer more particularly our services to non residents or foreign company who wish to invest, move or create a business in France.