French Tax Agents fees paid when UK residents sold a French property – French Government announced it will refund the Tax Agents’ fees
This article is for general information only. Tax law is a highly specialised area and you should only act or refrain from acting after receiving full professional advice on the facts of your particular case. This article is for general information and does not constitute investment advice.
Before 1st January 2015 all non-French residents who sold a French property over €150.000 had to appoint a représentant fiscal (tax agent). The agent worked out the capital gains tax liability of the non-resident seller. This was abolished from 1st January 2015 following a successful European Court challenge involving Portugal, which had a similar system. This only applies to EU residents. Non EU resident sellers still have to appoint a tax agent.
The issue of tax agent’s fees has come out in connection with reclaims of social charges following the de Ruyter case. Most people have lodged claims with the French Tax Administration and successfully recovered French social charges illegally deducted by the notaires on completion, but many did not at the same time claim a refund for tax agents’ fees. This should have been done because of limitation periods, see below.
Tax agent’s fees
The tax agents are private accountants specially authorised by the French government and usually appointed by the notaire just before the sale completed. There are only a very small number of them and they have had a de facto monopoly. Notaires often did not explain to English sellers at the outset that a tax agent had to be appointed at the seller’s cost. The tax agent’s fees were deducted by the notaire from the sale proceeds and were usually at least 1% of the selling price of the property regardless of the amount of the gain. The fees could however be deducted as a cost against any capital gains tax liability.
French government will refund tax agent’s fees to UK sellers
Sykes Anderson Perry contended when reclaiming social charges that the tax agent fees were charged illegally and that the French government should refund them because French law was contrary to EU law. The French government has in February 2017 finally announced that the tax agents’ fees were collected illegally and that they will now refund them. There will however be a small deduction because of the deduction for French capital gains tax, see above.
However limitation periods will apply and anyone affected should take action immediately. It appears that you have to make your claim to the French Tax Office by the end of the second calendar year following the year you sold the property. Accordingly for any sale in 2015 (from 1st January 2015 to 31st December 2015) your claim must be made by 31st December 2017. Similarly for any sale in 2014 you must have claimed by 31st December 2016. Because there was no tax agent requirement from 1st January 2015 onwards all claims should have been made by 31st December 2016, in practice they should always have been made at the same time as the reclaim for social charges and then should always be in time. It may however still be possible to lodge claims though the circumstances of each case will need to be considered.