Roche & Cie

Non-residents: towards an exemption from social charges (CSG-CRDS)?

03 Jan 2019

Many of you have heard of the cancellation of the CSG-CRDS, but it is important to remain cautious

What is the CSG-CRDS

The CSG (Generalised Social Contribution) and the CRDS (Contribution to the Repayment of Social Debt) are social security contributions.

Currently, non-residents are subject to these contributions on their real estate income as well as capital gains recorded on the sale of a property from a French source.

Towards an exemption from these taxes for non-residents?

The question of exemption arose seriously when France was condemned by the ECJ (Court of Justice of the European Union) following the De RUYTER judgment delivered on 26 February 2015 according to which a taxpayer domiciled for tax purposes in France but working in another Member State could not be subject to the CSG and CRDS on his income from assets.

But the French government has decided to maintain the situation by reconsidering the CSG and CRDS no longer as social security contributions in the strict sense of the term, but as taxes. Following a complaint against the French State, an infringement procedure has been initiated against France by the European Union Commission (still pending).

But in a new twist, Gérald Darmanin, Minister of Public Accounts, declared on 16 October 2018 that “persons who are not affiliated to Social Security in France but who are subject to the Social Security regime of another Member State of the European Union, the European Economic Area or Switzerland will no longer be subject to the CSG and the CRDS based on capital income”.

The draft law on the financing of social security for 2019 follows this trend and provides for the abolition of social security contributions in favor of non-residents. The law is expected to be enacted shortly.

Attention: taxpayers living outside the EU are not affected by this exemption. Indeed, only taxpayers domiciled in an EU, EEA and Switzerland are concerned. 

However, the exemption only applies to the CSG-CRDS. As a non-resident you will still be liable for a fraction of the social security contributions: additional contribution and solidarity contributions (7.5%).

Another article will be written soon on the subject, stay tuned for more information!