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Taxation

If the withdrawal agreement is not ratified, shares which are eligible under a share savings plan (PEA) must be issued by companies having their registered office in an EU Member State; donations to British non-profit organisations will no longer provide entitlement to a “patronage” tax deduction or a property wealth tax deduction; the rules concerning social levies on income from assets held in the UK will be amended.


You are concerned if you hold British shares in your share savings plan; if you are eligible for exit tax arrangements when moving to the UK; if you want to make donations to non-profit organisations; if you possess property assets in the UK.  

If you did not find the answers to your questions on this page, you can contact us at the following address : brexit.entreprises@finances.gouv.fr


  • Imprimer

Frequently

asked questions


  • What will the UK’s position be regarding social levies on income from assets ?

  • If the general withdrawal agreement is not ratified, three scenarios, which may overlap, are possible.

    French residents receiving UK-source income: taxpayers are liable, on their income from assets and revenue from investments, to the unlimited levying of tax and social security contributions in France subject to the provisions of the France/UK Double Taxation Convention of 19 June 2008 which provide, inter alia, that the relevant taxpayers are entitled to a tax credit in the same amount as the British tax for capital gains on property or a tax credit in the same amount as the French tax for property income. As social levies are covered by the Convention, the tax paid in the UK may be offset against the social levies where applicable.

    British residents receiving French-source property income: as a matter of principle, property income (rent and capital gains on property) is subject to social levies under domestic law. Pursuant to the France/UK Double Taxation Convention of 19 June 2008, the UK should consider that French social levies provide entitlement to a tax credit which will be offset against the British tax assessed on this income.

    Irrespective of the place of residence, persons who are not affiliated to a compulsory French social security scheme but who are governed by social security legislation subject to the provisions of Regulation (EC) No 883/2004 on the coordination of social security systems are concerned by a provision laid down in the Social Security Budget Bill (PLFSS) for 2019 which exempts them from the General Social Security Contribution (CSG) and the Social Security Debt Repayment Contribution (CRDS) assessed on income from assets and revenue from investments. Exemption from these two contributions applies on the basis of legislative conditions to all non-affiliated persons in France who are affiliated to a compulsory social security scheme in the UK. If the general withdrawal agreement is not ratified, these persons will no longer be entitled to the exemption as British social security legislation will no longer be subject to the provisions of the above-mentioned EU Regulation.

    Lastly, the solidarity levy assessed on income from assets and revenue from investments will be maintained after the UK leaves the EU for all taxpayers, regardless of whether the latter are affiliated to a compulsory social security scheme in the UK or not.


  • Can I continue to make donations to British non-profit organisations (NPOs) and be eligible for income tax/property wealth tax reductions under France's Patronage Act ?

  • If there is no withdrawal agreement, donations and payments to UK-based NPOs will no longer be eligible for this type of tax reduction.

    As a reminder, the only eligible foreign organisations are those whose headquarters are established in a European Union Member State or another state that is a party to the European Economic Area Agreement that has signed a treaty with France on administrative assistance to combat tax evasion and avoidance.


  • How will exit tax arrangements apply for transfers of residence to the UK (residence already transferred or to be transferred) ?

  • If the general withdrawal agreement is not ratified, exit tax arrangements stipulate that the transfer of residence for tax purposes outside France leads to the immediate levying of income tax and social levies on unrealised capital gains on shares, stocks, securities and voting rights, receivables originating from an earn-out clause, and capital gains subject to tax deferral (Article 167 bis of the French General Tax Code).

    A stay of payment is automatically granted when the taxpayer transfers his/her residence for tax purposes outside France to an EU Member State or to another State which is party to the agreement on the European Economic Area (EEA) and which has signed a mutual administrative assistance agreement to fight tax evasion and tax avoidance and a mutual tax recovery assistance agreement with France. In other cases, the stay is granted at the taxpayer’s express request and in consideration of providing collateral.

    For departures as from 1 January 2019, Article 51 of the Budget Bill for 2019 provides, however, for extension of entitlement to the automatic stay of payment, without providing collateral, for departures to any country or territory which has signed a mutual administrative assistance agreement to fight tax evasion and tax avoidance and a mutual tax recovery assistance agreement with France.

    Subsequently, provided the UK complies with this condition once it has left the EU, the automatic stay of payment will continue to apply.


  • What tax arrangements will apply to capital gains on property made by an individual seller who becomes a French resident after selling his/her former main residence in the UK ?

  • Under the France/UK Double Taxation Convention of 19 June 2008, all capital gains on property made by French residents are taken into account for income tax and social levies whether the sold property is located in France or in the UK. However, in the latter case, the taxpayer is entitled to a tax credit in the same amount as the British tax paid on the same gains which is offset against the corresponding French tax. If the British-source capital gains on property were to be exempted, no tax credit would be granted in France under this Convention. Nevertheless, the exemption for the sale of the main residence will apply provided that the property was the principal residence occupied by the seller until it was put on the market, that it was unoccupied until the sale and that the sale was carried out within a reasonable timeframe (see §190 of BOI-RFPI-PVI-10-40-10 on the assessment of this criterion).


  • I hold British shares in my share savings plan (PEA). What will happen after Brexit ?

  • If the general withdrawal agreement is not ratified, in order to be eligible for a share savings plan (PEA) and the share savings plan for SMEs (PEA-PME), shares must be issued by companies having their registered office in an EU Member State or in another State which is party to the agreement on the European Economic Area (EEA) and which has signed a taxation convention containing a mutual administrative assistance clause to fight tax evasion and tax avoidance or a mutual administrative assistance agreement to fight tax evasion and tax avoidance with France (4° of I of Article L.221-31 of the Monetary and Financial Code).

    This condition concerning the registered office of the company issuing shares is assessed on a permanent basis. As a result, if the UK is no longer party to the agreement on the EEA once it leaves the EU, securities issued by British companies will no longer be eligible for the above-mentioned share savings plans.

    Holding such securities in a PEA or PEA-PME would therefore represent a breach of the plan’s operating rules and lead, at least in theory, to its closure (Article 1765 of the French General Tax Code). However, to avoid the plan being closed, administrative doctrine provides that, in the event of the transfer of a company’s registered office to a country that is neither an EU Member State nor party to the agreement on the EEA, taxpayers have two months as from the occurrence of the event that made the securities ineligible to are entitled to regularise their situation. This procedure, which is intended to apply to cases of withdrawal from the EU and the EEA, enables taxpayers to choose between :

    • withdrawing the securities which have become ineligible from the plan in consideration of a compensatory cash payment in the same amount. However, if the plan’s lock-up period has been complied with, and if the taxpayer submits a request to his/her institution, such a withdrawal may be interpreted as an ordinary withdrawal without a compensatory payment but which, in this case, will be subject to standard social levies.
    • the sale of the shares which have become ineligible in the plan

    For details of the conditions governing this procedure, refer to § 40, 45 and 65 of instruction BOI-RPPM-RCM-40-50-50-20170925.