The CSG-CRDS saga
For more than five years, CERN's international civil servants and retirees, with the help of the CERN Staff Association and the “Groupement des Anciens” (GAC), have been fighting in the French courts to have the De Ruyter and Lobkowicz rulings recognized, and thus to stop French social security deductions (CSG - CRDS) from being levied on income from assets in the broadest sense of the term.
Following an appeal in 2019 by the Minister of the Economy, Finance and Economic Recovery, who asked the Council of State to annul the June 4, 2019 ruling of the Lyon Administrative Court of Appeals relieving the plaintiff (a CERN retiree) of the CSG, the CRDS, of the social levy and of the additional contribution to this levy, the Council of State ruled on September 9 on the basis of the impediment to the free movement of workers.
To summarize the situation, the tax authorities maintained that international civil servants and pensioners of these organizations and in particular those from CERN do not come under the European social security coordination agreements. This meant that the De Ruyter rulings were inoperative.
This strategy of the tax services was definitively swept aside by the Council of State, which relied on the fundamental principles of European law, which emphasizes the free movement of people and workers.
The Council of State also reminds us that to qualify a levy as a social contribution, the determining criterion is that of its specific allocation to the financing of a social security system. It can be qualified as a tax by French law, it does not matter, it is its allocation that prevails, even if the European national targeted by this tax is outside the scope of application of the regulation on the coordination of social security systems.
This helps to clarify a grey area which, beyond CERN agents and retirees, should also apply to agents of other international organizations who have made use of their right to free movement of workers under the terms of Article 45 of the TFEU (Treaty on the Functioning of the European Union).
This ruling by the Council of State therefore allows our active and retired colleagues to request reimbursement of social security contributions unduly paid in France for years not prescribed.
A contentious claim can then be filed with the tax authorities of his or her residence. As a reminder, this 3-year claim concerns the 2017, 2018 and 2019 income for French residents as well as for foreign residents receiving income in France.
This claim may concern :
- Collection of tax via the tax notice;
- Direct debits by banks or life insurance companies on investment products; and
- The related to real estate capital gains and paid via the form cerfa 2048.
The Staff Association will make available to its members and those of the GAC a sample letter of complaint template that can be adapted to each situation.
In conclusion, it can be stated that paying social security contributions at a loss does not comply with Union law and constitutes an obstacle to the free movement of workers.
However, this five-year long procedure is not completely finished, because there remains now the problem of the solidarity tax levy which was the subject of a cross-appeal by our lawyers in the context of this procedure before the Council of State and which was unfortunately rejected by the latter (read the opinion 432985 of the Council of State ruling on the litigation). There is also the case of the recipients of multiple pension schemes, which is also an important point for our colleagues who can claim a compulsory French pension.
These two points are currently being studied by the Staff Association and the GAC with the help of our specialized lawyers.
We will therefore come back to you regularly on these two issues in the context of social security contributions and the solidarity tax levy, which always seem to us to be questionable.