19/01/2018 by FRANCE TAX LAW 0 Comments
SOCIAL CONTRIBUTIONS VALIDATED BY EUROPEAN COURT OF JUSTICE
We may have seen the last episode of the “saga” between French Government and Non-French resident over the taxation of social contribution to them on their real estate.
The European Court of Justice said in the case JAHIN (CJUE 18/01/2018 – CASE C45/17 JAHIN) that a non-resident of France living outside the European Economic Area and Switzerland could be subject to social contributions (CSG and CRDS) levied on their income in France by the French tax authorities.
This contentious started a few years after the French government decided to apply social contributions (rate of 15.50%) on property income owned by non-French residents. The European court of Justice was questioned in 2015 on that sensitive subject and invalidated the tax provision and compelled France to reimburse the tax collected between 2012 and 2015 (case DE RUYTER 26/02/2015 C-623/13). That was not the end for the Government that took a new decision to limit its liabilities and invoked the regulation 883/2004 to reimburse residents within the EU, Norway, Iceland and Switzerland.
In addition and to overcome the Decision made by the court the social contribution were changed to finance the elderly solidarity funds.
Properties are not only owned by E.U residents but taxpayers outside the E.U such as Americans who felt discriminated by the decision. More appeals were brought to the European Court of Justice who said that the French Government was allowed to subject social contributions to non-residents outside E.U even if they do not benefit from the French social security system. The argument made by the french government to differentiate E.U resident from the rest of the world with regards to the 2004 Regulation was approved by the Court.
There is no doubt that the Judgement will bring more questions after the brexit. Will uk citizen receive the same treatment as non E.U residents. This is a possibility not to rule out if Mrs May cannot find any agreement with the rest of Europe .