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France finance

The social charges ’net’ is spreading …

The EU Regulation n° 1408/71 prevents a taxpayer from being charged social security payments in two countries.

In February 2016, France lost an EU court case (de Ruyter) for having acted against the above Regulation and for having incorrectly levied the social charges on a French resident who was already paying into a social security system outside of France due to an employment.

The decision was given on the basis that the funds collected by the CSG charge were in fact being allotted to a number of « caisses » which, globally, had a direct and pertinent link to various sections of the French social security system from which the taxpayer could not benefit.  Until 2016, these «  caisses » benefitting from the funds collected by the CSG charge were :

  • the «  caisse nationale d’assurance maladie (Cnam) »,
  • the «  caisse nationale d’allocations familiales (Cnaf) »,
  • the «  caisse d’amortissement de la dette sociale (Cades) »,
  • the «  fonds de solidarité vieillesse (FSV) » and
  • the «  caisse nationale de solidarité pour l’autonomie (CNSA) ».


Due to another case brought against the French later in 2016, again to do with the levying of social charges, this time on non-residents, the government reviewed the application of the CSG and the « caisses » that it was funding.

Then, through the Loi n° 2015-1702 du 21 décembre 2015 de financement de la sécurité sociale pour 2016, the government restricted the « caisses » being funded by the CSG funds to only now being the :

  • the «  caisse d’amortissement de la dette sociale (Cades) »,
  • the «  fonds de solidarité vieillesse (FSV) »


As a result, since the use to which the CSG funds are attributed no longer had a ‘direct and pertinent’ link to sections of the French social security system, the French government maintains that the CSG can be levied on taxpayers even though these may be liable to social security costs in other countries.


The problem with this is that the remaining four social charges are levied on the same basis as is the CSG, potentially enabling all five of the social charges to be levied.


The issue is that it now potentially brings into the scope of the social security charges such foreign incomes that have – up until now – been exempt from the social charges :  incomes such as those from foreign rents or foreign governmental income, income and gains for non-residents … or even income that is taxed in the USA ?


Whilst this explains why the tax offices are now insisting on treating as taxable income that income which should only be « taken into account » according to the double tax treaties, the arguments against these charges being levied are fast disappearing.


Hmm … uncertain times ahead !