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Update on the Taxation of Non-Residents and Community law

Update on taxation of non-residents and community law

Since the release of October 20th signed by Mr. Eckert, we know that the solidarity levy of 2% due before 1 January 2015 is not returned, being identified as not funding social security and also being excluded by Ruyter’s jurisprudence (the ECJ Judgment of 26 February 2015 and the Council of State of July 27, 2015)

But this lack of restitution remains unfounded. The argument given here is the fact that a portion of the amounts corresponding to the CSG is already partially allocated to FSV. This shows that the position of the ECJ, in all respects in line with the position of the European Commission and endorsed by the State Council, is in any case based on that assignment because France is not condemned notwithstanding this orientation funds to the old regime.

The reallocation of resources from the information disclosed does not therefore rule out the obligation of compliance of our right to the European Regulation (payroll taxes are already assigned to FSV: 1.15% 0.85% including CSG and social levy 0.30%; see tables 2 and 3 page 73, Report of the Commission on social Security accounts, October 2012).

That said it is worth pointing out news on these topics:

The 2% levy:

The Administrative Court of Appeal of Douai (Decision No. 14DA00317 of 14 December 2015) held that, on the same grounds as those adopted by the Court of Justice of the European Union, the additional contribution proceeds is allocated to the national fund for active solidarity, which participates in the financing of active solidarity income, must also be regarded as falling within the scope of the Regulation of 14 June 1971 and Regulation of 29 April 2004.

This reinforces the idea that the instructions of October 20, 2015 the Ministry of Finance and Public Accounts, the last paragraph of the press release 1 No. 487 cited above, are tainted with illegalities, as the solidarity levy of 2% before 2015, whose product is affected including the National fund for active solidarity, which participates in the financing of active solidarity income, under Article 3 of law No. 2012-1404 of financing social security in 2013, participates in funding compulsory social security (agriculture, general) has a direct and relevant connection with certain branches of social security (family) referred to in Article 4 of Regulation No 1408/71 and Article 3 of Regulation No 883/2004, and therefore falls within the scope of these regulations.

Wealth income:

Furthermore, and on another plane, also note that the Administrative Court of Appeal of Douai referred to the Court of Justice of the European Union for a preliminary ruling to the question about whether a European official may be subject to social security contributions on his French estate income:

Court of Justice of the European Union (Case C-690/15, Lobkowicz): “A principle of EU law it precludes an official of the European Commission is subject to the general social contribution , the social levy and additional contributions to the levy, the rate of 0.3% and 1.1%, on land revenues collected in a member State of the European Union? “

For this case, the ECJ could also confirm the ECJ case law with regard to social contributions on unearned income.

Conclusion: Without going into a controversial debate, the fact of playing the card time by letting the procedures continue without changing the law for the future in favor of abolition of social taxes on income and capital gains of non- residents and by refusing reimbursement of a portion of these taxes only confirms the lack of legal certainty for non-residents.

Indeed, it is still expensive and long to initiate legal actions on these issues, in particular that of 2%: the weakness of the issue in terms of amount does not encourage non-resident individual to continue while they already have mostly took several years to get a refund.

For more Information on Non-Residents taxation in France, Please contact our Firm.


Cabinet Roche & Cie, Chartered Accountant in Lyon, France.
Experts in Non-Residents Taxation.