The increase arises from a rise in the Contribution Sociale Généralisée (CSG), in the budget for 2026, which was increased from 9.2% to 10.6% on certain forms of investment income from 1 January 2026. CSG is one of the social charges (prélèvements sociaux).
Although the government intended to shield property capital gains from the increase, tax specialists have identified an anomaly in the legislation that appears to affect many non-resident property owners. ”La hausse de la CSG (de 9,2 % à 10,6 %), votée par la LFSS 2026, est bien applicable aux plus-values des non-résidents,” comments one leading tax specialist.
As a result, while French tax residents continue to benefit from a preferential regime that keeps social charges on property gains at 17.2%, some non-residents are now subject to a higher rate of 18.6%.
Who Is Affected?
The increase does not apply equally to all non-residents.
Individuals who can demonstrate affiliation to a compulsory health insurance system in another EEA country, Switzerland or the United Kingdom remain exempt from social charges on French property gains.
In these cases, however, sellers remain liable for the 7.5% prélèvement de solidarité, which continues to apply.
The position is different for many owners resident outside Europe. Residents of countries such as the United States, Canada, Australia and New Zealand may now find themselves liable for the full 18.6% social charge rate.
For a taxable capital gain of €100,000, the increase from 17.2% to 18.6% represents an additional €1,400 in social charges.
When combined with France's standard capital gains tax rate of 19%, the overall tax burden can approach 38% before the application of any allowances, taper relief or exemptions.
Legislative Oversight?
The distinction between residents and non-residents may be an unintended consequence of the drafting of the legislation.
When Parliament approved the increase in CSG as part of wider social security reforms, lawmakers specifically preserved the previous rate for property gains realised by French tax residents.
However, the legislation did not extend the same protection to gains realised by non-residents under the separate provisions governing foreign taxpayers.
The result is the unusual situation whereby French residents now face lower social charges on property gains than certain non-resident owners.
Whether the government intended this outcome remains unclear. However, unless the legislation is amended or clarified by the tax authority, the higher rate appears set to apply.
Related Reading:
