In the line with the decision of the Court of Justice of the European Union on February 26, 2015, it came as no surprise that on July 27, 2015, the French Administrative Supreme Court ruled that the social taxes due on real-estate incomes (which are currently allocated to social security financing) qualify as "contributions" covered by the EU Regulation 1408/71 of June 14, 1971, which laid down the rules that:
- an individual is covered by the legislation of a single EU Member State,
- an individual pays social security contributions (which include social taxes on real-estate income) only in that country.
As a consequence, based on the above EU rules, an individual cannot be subject to social taxes on French real-estate income if such individual is already affiliated to the social security system of an EU or EEE country other than France or Switzerland. Given this context, the government has just announced that concerned taxpayers will be entitled to be refunded of the social taxes on real-estate income, subject to the applicable statute of limitations.
For the future, the law is obviously about to be modified (with the 2016 Social Security Financing Bill) but in a way that maintains the payment of social taxes on French real-estate incomes. For this purpose, the French government will re-allocate these social taxes to specific financing other than the ones allocated to the French social security system, in order to avoid the qualification of "contributions" from an EU standpoint.