Brussels, 22/10/2014 (Agence Europe) - French procedures for levying social security contributions from investment income from a person residing in France but who does not work there, is not compatible with Community law because it constitutes a barrier to the free movement of workers, according to the conclusion by Advocate General Eleanor Sharpston on Tuesday 21 October at the European Court of Justice (C-623/13).
This is not the first time that France has been referred to the European Court of Justice to defend the way in which it levies social security contributions, particularly with regard to the contribution sociale généralisée (CSG) and the contribution pour le remboursement de la dette sociale (CRDS). In both rulings made in 2000, the Court had already deemed that taxes for social security contributions were incompatible because they were specifically used to fund the general French social security regime from the income of workers residing in France but who are subject to the Social Security legislation of another member state. This involved a clear breach of EU law and, more particularly, a violation of the ban on the cumulative legislation applicable to social security (Regulation n.1408/71), the free movement of workers and freedom of establishment.
This case (C-623/13) is almost identical, except for the following detail: it involves a Dutch national working in the Netherlands but residing in France and who refused to pay the CSG, CRDS and other social security contributions taken from his investment income (rent obtained in the Netherlands). The French State Court asked the European judges whether they were in the same situation as in 2000 or whether the ban on the accumulation of legislation applicable to social security is limited to contributions taken from the income of activities carried out in the professional sphere.
According to Sharpston, France is still guilty of failing to respect provisions under Community law. The regulation focusing on the ban on the accumulation of legislation applicable to social security does not make any distinction between different forms of revenue. She pointed out that the objective in this regulation is to remove the barriers preventing migrant workers exercising their right of freedom of movement. By taxing this kind of contribution from investment income, France was creating this kind of barrier. The Advocate General explained that it was not even a question of whether the Netherlands imposed social security contributions to be taken from rental income (which is the case) because a foreign national does not have to make contributions to the French social security system when they are already paying contributions in another member state. (JK)