The Court of Justice for the European Union (CJEU) today issued a judgment concluding 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 is: Ministre de l'Action et des Comptes publics v. Dreyer, C-372/18 (14 March 2019)
As briefly explained in a CJEU release [PDF 162 KB], the individual taxpayers (French tax residents) were insured under the Swiss social security scheme because the husband taxpayer spent his career working in Switzerland. In 2016, the French tax authorities declared the taxpayers were subject, in respect of income from assets received in France in 2015, to contributions and levies—in particular, the Caisse nationale de solidarité pour l’autonomie (CNA or National Solidarity Fund for Independent Living).
The taxpayers claimed, on the basis that the benefits funded by the contributions and levies were social security contributions, that they were already insured under the Swiss social security scheme and could not be required to contribute to the funding of the French social security scheme. 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 EU Member State only and, for those purposes, Switzerland is regarded as a EU Member State.
The taxpayers initiated an action against the French tax authorities, and the Cour administrative d’appel de Nancy (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. The court therefore referred the case to the CJEU for a determination whether the benefits (allocation personnalisée d’autonomie (personal independence allowance) and prestation compensatoire du handicap (disability compensation allowance)) may be regarded as social security benefits.
The CJEU today found the subject 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 KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.