When a property in France is sold, since “Brexit”, the French authorities charge local social security on the selling price at the rate of 7.5% which can amount to thousands of Euros.
Despite the UK leaving the EU, the previous social security principles have remained in that people who live in the UK or any EU state are liable to pay social security contributions in only one state. The French authorities recognise this but will only refund or cancel the French social security bill on production of written confirmation from HMRC that the person is insured within the UK National Insurance scheme.
HMRC have a long established procedure under which employed or self-employed workers can apply for a certificate to that effect via an online service.
However, retired or otherwise not working UK residents need to write to HMRC and request confirmation so that they can reclaim the French social security.
At the time of writing, the turnaround time for HMRC to respond is over 6 months, and can sometimes merely request further information. The practical problems are not only delay in receiving the refund from the French Authorities but some French property lawyers are refusing to repay the social security if the HMRC confirmation is not provided within 3 months, despite the legal time limit to reclaim the over-paid social security is broadly two years.
Although retired and wealthy owners of French holiday homes are not top of everyone’s sympathy list, in many cases UK retirees bought relatively modest property decades ago. As property sales in France can go from marketing to an agreed sale in very short periods, often a matter of weeks, it is it impossible to obtain a letter from HMRC in time to avoid the retention of social security.
One would think it would be very simple for HMRC to provide an online process to enable them to check the seller’s identity and National Insurance number and provide confirmation acceptable to the French authorities within days…or is that too optimistic?
The next step
If you have any questions regarding this insight please contact Michael Crellin, or your usual UHY adviser.
