The CSG-CRDS taxable on the income of non-European residents is contrary to European law (Fr)
The Council of State rendered on July 27, 2015 a decision eagerly awaited by non-resident French nationals which confirms the De Ruyter judgment rendered by the Court of Justice of the European Union (CJEU) in February, considering that people who are affiliated to a social security scheme of another Member State may not be subject in France to social levies on their income from assets from foreign sources taking into account the allocation of these levies to the financing of the French social protection system.
This decision was made when the legislator extended the scope of social security deductions to property income from French sources received by natural persons fiscally domiciled outside of France in the amending finance law of 2012.
It remains to be seen what are the effects of this decision for persons subject to the CSG / CRDS.
First of all, contrary to what has been argued by some parliamentarians, this judgment only concerns residents of a Member State of the European Union. The reasoning of the judgment is quite explicit and in no way allows an interpretation Verbatim for all non-residents.
Second, the decision only concerns social contributions. Consequently, non-resident French people will always have to pay their property income as income tax in the cases provided for by article 197 A of the general tax code.
Thirdly and this remains the most important element for French taxpayers: given that the judgment of the Council of State states that the disputed tax levies fall within the scope of the Council regulations of June 14, 1971, the provision of the Amending finance law is therefore contrary to European law and therefore obsolete.
Consequently, the non-residents concerned may request the reimbursement of social contributions unduly collected by France by making a complaint to their tax administration.
The government very quickly outlined the first elements of response as to the effects of this decision: Bercy intends to use the three-year limitation period under common law for the settlement of such disputes. Consequently, taxpayers who have not made their request before December 31, 2014 will not be able to have their contributions paid in 2012 reimbursed. The same principle applies for 2015 compared to 2013 payments. In addition, some media advertise that the government would be tempted to change the allocation of the product of the CSG on the capital to circumvent the judgment of European justice. It is notably envisaged to arrow this recipe, no longer towards the general Social Security scheme, but towards the Old Age Solidarity Fund (FSV).
A debate that will be decided as of the next finance budget to be voted this fall…
© Weissberg & Weissberg - 2015