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ECJ Rules In French Social Security Tax Dispute

by Ulrika Lomas, Tax-News.com, Brussels

26 March 2019


The European Court of Justice has ruled that welfare contributions aimed at funding social security benefits in France cannot be charged on income from the assets of French residents insured under the Swiss social security scheme.

The case concerned two married French resident taxpayers who are insured under the Swiss social security scheme, due to one of them undertaking their career in Switzerland.

In 2016, the French tax authorities declared that they should be subject, in respect of income from assets received in France in 2015, to contributions and levies apportioned, in particular, to the National Solidarity Fund for Independent Living (CNA).

On the basis that the benefits funded by the contributions and levies at issue administered by that body are social security contributions, the taxpayers disputed their liability to those contributions and levies before the French courts on the ground that they are already insured under the Swiss social security scheme and cannot be required to contribute to the funding of the French social security scheme.

The ECJ pointed out that the EU regulation on the coordination of social security systems provides that persons to whom that regulation applies are to be subject to the legislation of a single member state only and, for those purposes, Switzerland is regarded as a member state.

In the action brought by the taxpayers against the French tax authorities, the Administrative Court of Appeal, Nancy, France, expressed doubts as to the nature of the benefits funded by the contributions and levies apportioned to the CNA.

That court therefore asked the Court of Justice whether those benefits, namely the allocation personnalisée d'autonomie (personal independence allowance (APA), in English) and the prestation compensatoire du handicap (disability compensation allowance (PCH)), may be regarded as social security benefits.

The ECJ concluded that the APA and the PCH are "social security contributions," and there is no need to ascertain whether either of the benefits are "special non-contributory cash benefits" within the meaning of that regulation, since the Court has previously held that both concepts are mutually exclusive.

TAGS: court | tax | law | legislation | social security | France | Switzerland | regulation | European Union (EU) | Europe

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