On June 23, 2016, the United Kingdom voted to leave the EU.
France has one of the largest populations of expatriate Britons, with 400,000 British established on its territory and there are 300,000 French, currently living in the UK.
What would be the impact of Brexit for these two populations?
It is very likely that there will be many impacts in different areas of taxation: VAT, customs duties, corporate tax, on dividend distributions, general data protection regulation, distance sales; e-commerce, Intellectual property protection....
It should also not overlook the consequences of the fall in sterling against the euro, particularly for British citizens living their retirement in France and for those who must pay French taxes.
There could be many issues for British citizens non-resident in France but are having interests, whether they transfer their residence into or out of France or taxation applicable in France for European residents and third countries.
In this context, it seems useful briefly to reassure UK tax resident regarding the ongoing tax litigation with the French tax authorities.
It should be remembered that, among other subjects, many procedures were initiated by non-residents (European and third countries citizens) in order to obtain the refund of social security contributions of 15.5% paid on the land revenue generated in France or on real estate capital gain on the sale of a property situated in France.
The jurisprudential evolution both European and French (including the case-law Ruyter - the ECJ Judgment of 26 February 2015 and the decision of the Conseil d'Etat dated 27 July 2015) followed by the press releases issued by the French Tax Administration, it was possible to obtain reimbursement of the so called "social contributions" up to 13 5% (partial rejection for the remaining 2%) only for European and Swiss non-residents (those decisions apply to persons affiliated to the social security system of a country other than France located in the EU, European Economic Area or Switzerland). For residents of third countries the outcome of the tax litigations on the same subject is still uncertain.
If the Brexit could have, in the future, consequences on the tax treatment of the UK citizens in France (depending on the agreements and discussions ahead), it remains that the ongoing tax litigations will not be affected by this event. Indeed, for the taxpayers European tax resident during the years concerned by the claim, any other condition for reimbursement is also fulfilled, no impact should be afraid of BREXIT on upcoming repayments under proceedings initiated.
The impact on future tax or other litigations is unclear at this stage.
We know that following the article 50 of the Maastricht Treaty, the Member State which decides to withdraw shall notify its intention to the European Council.
The Treaties shall cease to apply to the State in question from the effective date of the withdrawal agreement or, failing that, two years after the notification.
However, for parties engaged in ongoing litigation or contemplating to engage litigation, speed the process for a decision or settlement prior to the end of the two-year negotiation period could be a good idea.