Social security contributions and non-residents outside Europe: the ECJ is pronounced

It follows from the last judgment in “De RUYTER” that a person subject to a social security scheme of a Member State of the European Union can not be subject to social security levies collected by France on income from one’s assets .

France was then condemned to repay almost 300 million euros then collected wrongly.

The French tax authority has therefore allowed the reimbursement of social security contributions to non-residents established in Switzerland and in the European Economic Area (EEA – European Union, Norway, Iceland) paid on the income of the heritage. Conversely, it excluded this reimbursement to non-residents established in a third country in the European Economic Area (EEA), particularly in the American continent or in Asia.

These rejection decisions by the tax authorities were appealed before the Administrative Court and challenged on the following grounds:

• Infringement of the principle of free movement of capital

By differentiating the situation of residents of the EEA and residents of third countries to the EEA, France violates the Community principle of free movement of capital and non-discrimination against third-country residents of the EEA .

• Violation of the principle of equality before the tax

The position taken by the French administration thus generates a breach of equality in the face of the tax, which is not justified by an objective difference of position or by a ground of general interest in relation to the purpose of the law which thus establishes and violates the principle of equality before the tax.

• Violation of the bilateral conventions concluded by France in the field of social security

By a decision dated 25 January 2017, the Council of State decided to refer a case concerning the taxation of a non-resident established in a third State to the European Economic Area (EEA) at the Court of Justice of the European Union (CJEU) through a preliminary question.

The Court of Justice of the European Union (CJEU) has just ruled that Articles 63 and 65 of the Treaty on the Functioning of the European Union (TFEU), did not oppose the disputed French legislation which submits in France to social security contributions income from the capital of a French national residing in a third State, whereas an EU national covered by a social security scheme of another Member State would be exempt. Clearly, the subjection of residents of third countries to the EEA to social security contributions is justified