Roche & Cie

A 15,5% saving for the non-residents

07 Nov 2014

Social charges have been implemented in France in the 90’s, and their goal is financing French social security. The CSG-CRDS (Generalized Social Contribution and Social Debt Reimbursement Contribution) are the best-known components of the French social charges.

These social security contributions have a wide range of applications, as they are applied to all kind of revenues. Since 2012, non-residents are also subject to these contributions, especially for their French real estate revenues. As such, we invite the reader to consult our comparative study on the French real estate taxation here.

In this way, the non-resident is forced to pay a contribution allowing the financing of the French social security, and a priori he will never benefit from it. Also, even if the taxpayer would be liable to this contribution in France, nothing opposes the State of residency of the taxpayer to tax, in turn, the French revenues in order to finance its own social system! So the non-resident participates to the financing of two social security systems, but in the end he benefits from only one of them…

Many French deputies noticed this unfairness. As such, they called the attention of the Council of State and the National Assembly on the legitimacy of such taxation applied to non-residents. Evidently, the French State having no interest to exempt non-residents from this tax, it seems that the solution looms through the intervention of different European institutions.

We offer here an overview of the progress of the procedure in this matter.


In 2013, several complaints of national elected representatives have first of all allowed the opening by the European Commission of an infringement case brought against France (European procedure Pilot 2013/4168), the goal of which would be to sanction the double taxation of  the non-residents.

The same year, the Council of State asked to the Court of Justice of the European Union (CJEU) a preliminary ruling (appeal 623/13, 29 November 2013): “ is the French law contrary to the European legislation which stipulates that an European resident can’t be liable to social charges in several member-States? “. Because of this procedure with the Court of Justice of the European Union, the Commission suspended its work on this file, and is waiting for the response of the European Court.

On the 21st October, Mr Sharpston, General Lawyer of the Court of Justice of the European Union, suggested a reply to this question that the Court will probably follow. In his conclusions, he estimates that all French social contributions (i.e. the Generalized Social Contribution, the Social Debt Reimbursement Contribution, the social security contribution, its additional contribution and the solidarity levy) have a “direct and sufficiently relevant link” with the laws relative to the French social security, which are matter of the European Regulation relative to the application of the social security systems (article 4 of the Regulation (EEC) n°1408/71 of the Council, 14 June 1971). In concrete terms, the general Lawyer estimates that the French social charges are matter of the European regulation relative to the social security of the member States, and for this reason, don’t have to lead to a double taxation of the taxpayers.


The Council of State deposited its preliminary ruling on 29 November 2013. Yet, the CJEU has one year to formulate a response to the State institution which consulted it. Consequently, the response of the CJEU to the preliminary ruling should appear in the next few months.

From the moment where we will obtain this response, all the consequences should then be drew, as far as the decision given by the CJEU is binding and will have to be applied by the Council of State.

Following to this response, the infringement procedure initiated by the European Commission will be able to start again, by following logically the CJEU’s response. This procedure should lead to a condemnation of France, for unjustified double taxation of the non-residents, as the latter don’t enjoy the services what they paid for…

We remind the condemnation of France in 2000, when the Generalized Social Contribution was paid on the salaries of cross-border workers who were already paying in the State where they used to work (Court of Justice of the European Communities 15 February 2000, C-169/98). The foundation was similar to the question which we are interested in today, that is to say the contribution to two social security bodies…

So all indicators seem to show an imminent cancellation of the social charges on the French incomes of the non-residents. In the future, this will allow a substantial savings of 15,5% on rental income and capital gains tax on sales carried out in France.

News : On Thursday 26 February, the European Union Court of Justice in Luxembourg pronounced a judgment of principle : To learn more

Cabinet Roche & Cie, English speaking accountant in Lyon, France.
Specialist in Real estate and non-résidents taxation.