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5 January 2016


“De Ruyter” caselaw: The end?

Further to the De Ruyter case law by ECJ on February 26 2015, the French government had to change its national legislation to comply with the EU rules.

To maintain the budget income, it has been decided to change the architecture of the allocation of funds of the French social security scheme (article 24 of Social Security Financing Act for 2016), social taxes will no longer fund the compulsory French social security scheme but will now be mainly allocated to solidarity funds and to non-contributory benefits rather than contributory benefits.

In doing this, the Government wanted to comply with its European obligations while neutralizing the De Ruyter case for the future. In other words, the government maintains social taxes on income from assets for individuals affiliated to a social security scheme of another Member State by defusing the main arguments in the De Ruyter case law which were favorably received by the ECJ.

However, it can be argued that these new provisions based on the difference between non-contributory and contributory benefits are not sufficient to exclude EU regulation on social contributions.

We may expect further developments regarding EU/EEA/Swiss individuals already affiliated to a social security scheme of another Member State. Furthermore, the French tax administration makes no reference to non-resident individuals domiciled outside EU/EEA/Switzerland regarding the practical modalities for claiming a refund of social taxes. This differential treatment between EU residents and non-EU residents may raise issues (affiliation or not to a social security scheme).