Current issues

Bornhauser helps clients who are subject to the social security regime of another European Union member state or the Swiss social security regime and who have received rental income from French sources in 2015, 2016 and 2017, or who have realised capital gains on real estate in France in 2016, 2017 and 2018.

That income was subject to social security contributions in France (CSG, CRDS and additional levies – initially at an overall rate of 15.50%, recently increased to 17.20%), and repayment from the French Treasury may be requested.

In 2015, the Government decided to address the consequences of the de Ruyter case for the past only by repaying contributions for 2012, 2013 and 2014, believing that it would be able to keep future tax revenues if it changed the budgetary allocation of such contributions to make them “de Ruyter compatible”. 

The lower courts, however, began to disavow Bercy’s position: first, in a decision of the Administrative Court of Strasbourg of 11 July 2017 (No. 1700440), then when that decision was upheld by the Administrative Court of Appeal of Nancy of 31 May 2018 (No. 17NC02124).

It is likely that the State Council (Conseil d’Etat) and the European Court of Justice will issue decisions in 2019 confirming that all of the taxpayers concerned have a right to restitution. In this respect, the government is so unsure that its position is correct that the last Finance Act spontaneously removed liability for these contributions with effect from 2019.

Pending the final outcome, these taxpayers must file a claim now in order to avoid having their claims time barred.

They should also claim not only repayment of the undue tax and default interest, but also special compensation. Given France’s repeated – and in our view, quite deliberate – breaches of European Union rules, always at the expense of the same category of taxpayers, these taxpayers should sue the government for misconduct and seek compensation for their losses.

We are available to help taxpayers determine if they should take these steps, and to do so if appropriate.