Possible refund of 'social charges' on investment income for S1 holders

[Thibaut J]

[quote user="parsnips"]Hi,

I have just read in the BDO (tax consultants’) bulletin that there is a

case at the ECJ (EU Pilot 5973/2013) contesting the application of

french ‘social charges’ to the investment income of french resident UK

state pensioners (with S1) on the same grounds that their pensions are

exempted , ie. that as the proceeds of these impositions are ring fenced

to finance specific social services , and EU reg. 1408/71 states that

no-one can be subject to more than one social security system, then S1

holders cannot be made to finance the french health system through these

contributions.

We are advised , if we wish to get a refund for CSG etc. paid in

2012 (in the event that France loses the case) the deadline for a

provisional appeal , in writing , or by email , is 31 Dec 2014.

There is a similar ongoing case concerning tax and social charges on

house sales and rents of non-residents which is also subject to a

31/12/2014 deadline for provisional claims for refund.[/quote]

Dear all,

I refer to several messages posted in various forums and I would

like to clarify informations.

This matter is not relating to UK state pensioners.

The EU Pilot 5973/13 is not relating to UK state pensioners.

The file has been opened due to a complaint by a French national

expat non-resident.

EU Pilot isn't a case at the Court of Justice ECJ.

This is a first step process by the European commission, and not yet

submitted to the ECJ.

At this stage, the European commission has closed EU Pilot files and

has opened Infringement NIF cases.

The cases are not submitted to ECJ.

Currently there are two cases:

* Social contributions on rental income "prélèvements sociaux sur

revenus du patrimoine"

EU Pilot 4339/12/EMPL (closed) ----->  Infringement

case NIF 2013/4168 (open)

* Social contributions on capital gain tax / property sales 

"prélèvements sociaux sur revenus de placement"

EU Pilot 5973/13/EMPL (closed) ----->  Infringement case NIF 2014/4140 (open)

The European commission has temporarily interrupted the actions

until a judgement of the ECJ in the case C-623/13

(preliminary ruling request to

know if social contributions from assets

fall within the scope of the regulation (EEC) 1408/71).

 

To make a claim,  here is a sample / Registered letter to sent to:

Service des Impôts des Non-Résidents, TSA 10010,

10 rue du Centre, 93465 Noisy-Le-Grand Cedex, France

" J’ai l’honneur de contester le bien-fondé des prélèvements sociaux

pour les motifs suivants.

De tels prélèvements sociaux paraissent

contraires au principe communautaire d’interdiction de double cotisation

à un régime de sécurité sociale.

Il apparaît en effet que ces

contributions sociales participent au financement de régimes

obligatoires français de sécurité sociale.

L’assujettissement de revenus

d’un bien immobilier par un non-résident, par application des

dispositions de l’article 29 de la loi n° 2012-958 de finances rectificative du 16

août 2012, n’étant pas réservé aux contribuables bénéficiant

d’un droit à prestation et d’un avantage servis par un régime de

sécurité sociale du fait de leur affiliation à l’un des régimes de

sécurité sociale français, il est non-conforme au droit communautaire.

Pour ma part, je ne bénéficie pas de la protection sociale du système

français de sécurité sociale et je ne saurais donc être assujetti à des

prélèvements sociaux qui n’ont d’autre finalité que le financement d’une

protection sociale dont je ne peux bénéficier.

En l’attente des

décisions attendues de la Cour de Justice de l’Union Européenne, saisie

notamment d’une question préjudicielle C-623/13, je conteste le

bien-fondé des prélèvements sociaux qui ont été acquittés sur les

revenus en France d’un bien immobilier.

Au vu de tout ce qui précède, il

vous est demandé le dégrèvement des prélèvements sociaux litigieux, et 

la restitution de la somme de XXXX € assortie des intérêts moratoires. "

Just to clarify,

EU pilot, infringement cases at the European commission are relating to non-resident only.

[parsnips]

[quote user="parsnips"]Hi,

I have just read in the BDO (tax consultants’) bulletin that there is a

case at the ECJ (EU Pilot 5973/2013) contesting the application of

french ‘social charges’ to the investment income of french resident UK

state pensioners (with S1) on the same grounds that their pensions are

exempted , ie. that as the proceeds of these impositions are ring fenced

to finance specific social services , and EU reg. 1408/71 states that

no-one can be subject to more than one social security system, then S1

holders cannot be made to finance the french health system through these

contributions.

We are advised , if we wish to get a refund for CSG etc. paid in

2012 (in the event that France loses the case) the deadline for a

provisional appeal , in writing , or by email , is 31 Dec 2014.

There is a similar ongoing case concerning tax and social charges on

house sales and rents of non-residents which is also subject to a

31/12/2014 deadline for provisional claims for refund.[/quote]

Hi,

Hi,

With reference to thibaut’s comments , it seems that BDO Guernsey, (see their

website) have recalled the knock-on effect of the previous CEJ decision

regarding frontier workers, in 2001. This established the principle

that under EU reg.1408/71 nobody can be subject to more than one regime

of social security. A subsequent case extended this principle to UK

state pensioners , who are regarded as still subject to UK social

security as their pensions and health care are covered by that regime.

That is why UK pensioners do not pay social charges on their UK sourced

pensions.

Even at the time that the pension exemption was created , it was

difficult to see why the same principle should not be applied to the

investment income of UK state pensioners. It may have been because

nobody at that time proposed such an application to the CEJ. No doubt

the french will wriggle to avoid any such outcome , and this could go on

for years , with no certainty of a good result- (from our point of

view)-; however , it costs nothing to get a provisional claim in to beat

the 3 year deadline.

---

[NormanH]

"nobody can be subject to more than one regime

of social security"

But I am. I have a OAP  from the UK which should have  paid for my health care by your logic, but  as I also have a French pension I also pay French social charges and the UK contributes nothing despite   the taxes I still pay there and the NI contributions in the past.

[woolybanana]

Perhaps this unfairness should be looked at by the European court Norman. Why not initiate the process?

[Pickles]

[quote user="NormanH"]"nobody can be subject to more than one regime

of social security"

But I am. I have a OAP  from the UK which should have  paid for my health care by your logic, but  as I also have a French pension I also pay French social charges and the UK contributes nothing despite   the taxes I still pay there and the NI contributions in the past.

[/quote]

But isn't that just an artefact of the existing rules which have been negotiated across the EU, in which in retirement you are covered by the social security system that you were in last before retirement (if that's how it works; please forgive my ignorance if that's not the way it works), and the reciprocal arrangement has been agreed on the basis that someone who worked in France for some time but then for the last few years worked in the UK is covered by the UK in retirement, and that the number of these cases is relatively small.

[idun]

Pickles, it depends on where one lives when retired too.

[NormanH]

In fact the system is that if you have a pension from the country you live in whatever the amount and whenever it was gained it is that country that pays for your Health care.   If you have worked in several then the one in which you paid in most is responsible.

In my case this means that I paid in enough in the UK to have an OAP, and so according to parsnips to have acquitted my dues as far as being covered for NI payments, yet because I have a small French pension I am counted as a French pensioner also for the purpose of social charges.

That seems a little like paying into two systems to me; one that I have paid up in full to, and the other ongoing.

My case will become more and more common as others who have worked in France had a business or been an AE come to full retirement age (I think perticularly of those who were early retired and started AE schemes to obtain health cover)

[parsnips]

[quote user="Pickles"][quote user="NormanH"]"nobody can be subject to more than one regime

of social security"

But I am. I have a OAP  from the UK which should have  paid for my health care by your logic, but  as I also have a French pension I also pay French social charges and the UK contributes nothing despite   the taxes I still pay there and the NI contributions in the past.

[/quote]

But isn't that just an artefact of the existing rules which have been negotiated across the EU, in which in retirement you are covered by the social security system that you were in last before retirement (if that's how it works; please forgive my ignorance if that's not the way it works), and the reciprocal arrangement has been agreed on the basis that someone who worked in France for some time but then for the last few years worked in the UK is covered by the UK in retirement, and that the number of these cases is relatively small.

[/quote]

Hi,

     Someone whose last employment  before retirement was in France , and who paid social charges on their income , is automatically subject to the french social security system , and has to claim their retirement pension via their french "caisse retraite". 

 A pension is calculated based on all their contributions during their working life within the EEC, including their UK NI contributions , but it is paid by the french caisse, and as they are subject to a french regime , the UK will not issue a form S1 . 

  Like all other french pensioners they have to pay "social charges" on their pensions.

  This was a trap which many in the past did not foresee when they started businesses, or took employment,in France in order to gain access to the french health system , in the period between their ceasing UK employment ,and reaching UK retirement age. 

[Pickles]

[quote user="idun"]Pickles, it depends on where one lives when retired too.

[/quote]

I'm afraid the more I wrote in that post, the more I realised that I was just digging a hole for me to fall in! Apologies for taking up the time of all of you in explaining this to me!

[quote user="NormanH"]In fact the system is that if you have a pension from the country you live in whatever the amount and whenever it was gained it is that country that pays for your Health care.   If you have worked in several then the one in which you paid in most is responsible.

In my case this means that I paid in enough in the UK to have an OAP, and so according to parsnips to have acquitted my dues as far as being covered for NI payments, yet because I have a small French pension I am counted as a French pensioner also for the purpose of social charges.

That seems a little like paying into two systems to me; one that I have paid up in full to, and the other ongoing.

[/quote]

So in your case the UK will have not made any payment to the French social security/health system at any time?

But the UK in your case will be making payments of a pension based on your NI contributions, will it? Or only a pension based on contributions to a pension scheme?

[quote user="NormanH"]

My

case will become more and more common as others who have worked in

France had a business or been an AE come to full retirement age (I think

perticularly of those who were early retired and started AE schemes to

obtain health cover)

[/quote]

I can see that, but the numbers are still small enough in the overall scheme of things for reciprocity to be allowed to balance things out ... or are they?

[quote user="parsnips"]Someone whose

last employment  before retirement was in France , and who paid social

charges on their income , is automatically subject to the french social

security system , and has to claim their retirement pension via their

french "caisse retraite". 

 A pension is calculated based on all

their contributions during their working life within the EEC, including

their UK NI contributions , but it is paid by the french caisse, and as

they are subject to a french regime , the UK will not issue a form S1 . 

  Like all other french pensioners they have to pay "social charges" on their pensions.

 

This was a trap which many in the past did not foresee when they

started businesses, or took employment,in France in order to gain access

to the french health system , in the period between their ceasing UK

employment ,and reaching UK retirement age. 

[/quote]

So you are saying that the UK will not make any NI-based pension payment to someone who ends their working life in France despite having perhaps spent the majority of their working life in the UK? And it will not make any contribution to the French system on their behalf either?

[parsnips]

Hi Pickles,

     What I am saying is that the social security system of the country of last employment is responsible for the payment of the accumulated pensions.

So any pension due in respect of NI paid in the UK is paid , but it is paid via the french "caisse" which pays the french part of the combined pension. You can read the mechanism for combining the pensions in the UK social security abroad leaflet on the UK govt site.

       I do not know whether the UK recompenses the french for the NI portion , but I suspect they do.  In any case, the pensioner gets all the pension payments -from the various regimes- to which he is entitled .

[Pickles]

[quote user="parsnips"]Hi Pickles,

     What I am saying is that the social security system of the country of last employment is responsible for the payment of the accumulated pensions.

So any pension due in respect of NI paid in the UK is paid , but it is paid via the french "caisse" which pays the french part of the combined pension. You can read the mechanism for combining the pensions in the UK social security abroad leaflet on the UK govt site.

       I do not know whether the UK recompenses the french for the NI portion , but I suspect they do.  In any case, the pensioner gets all the pension payments -from the various regimes- to which he is entitled .

[/quote]

Ah. Much clearer, thanks.

[NormanH]

This is quite correct as far as the theory is concerned.

In fact I get my OAP paid from the UK in Euros, and my 3 French pensions paid from 3 different 'caisses' in France.

They are not combined and the total was never calculated.

This is probably an abberation but it is how it works for me in practice.

SO..

1) Pensions are paid officially by the last country worked in (despite my odd situation I agree the parsnips has explained the 'normal' version correctly

2) Health cover is as I explained above, not automatically the last country worked in but:

either the one you are living in is responsible if it is paying a pension however small

or the one where you paid in most if you happened to work in several different

Even this is muddled up in practice by the fact that the French seem to operate a system by which those who have earned a miniscule pension are given it in a lump sum, and so they are no longer counted as  French pensioners. This is reserved for those of us who have enough to get a monthly payment.

This is not stated anywhere that  I can see, but is an observation based on evidence from a few people (Such as Emily A here)

[idun]

Somewhere in all this, you have lost me.

I do know what applies to us, which I am rather thankful for.

UK resident + french pension = french social security payments on french pension + french S1 to hand into Newcastle to cover NHS.

and eventually

UK resident+french pension + uk pension = NHS cover without an S1 from France and no french social security contributions.

Income tax in either case, only paid in the UK.

[NormanH]

Yes you fall exactly into the case I outlined.

Once retired you have a pension from the Uk where you live (even if you also have a French one), so the UK is responsible for you.

[idun]

Yes, but it doesn't alter the fact that I am confused about some of the things said on here.

.......... french pension? Have you seen that many have not received theirs, ..... and we were in that predicament, they didn't pay out for months and insisted that it was 'normale' even though we had all the paper work done when it should have been, well in advance to be precise. And then after it was due, sent out a whole new wadge of papers to fill in, in spite of telling us that everything had been done, well before it was due to be paid.

[Bobdude]

May I also point out that the test case ECJ (EU Pilot 5973/2013) according to valuable information provided by 'Thibaud' (thank you Thibaud) refers to NON-RESIDENT (in France) holders of a UK S1. Before we all get too excited and prepare our reclamation letters!

[parsnips]

[quote user="Bobdude"]May I also point out that the test case ECJ (EU Pilot 5973/2013) according to valuable information provided by 'Thibaud' (thank you Thibaud) refers to NON-RESIDENT (in France) holders of a UK S1. Before we all get too excited and prepare our reclamation letters!

[/quote]

Hi,

      I agree that excitement would be premature, but BDO Guernsey tax consultants seem to think that the present cases may lead to the exemption of SI holders' investment income. (I well recall that UK pensions were eventually exempted as a result of a case involving only french residents working abroad)  As the 31/12/2014 is the cut off for claims for CSG paid in 2012,  BDO advise a 'provisional' claim, so as to not lose any potential refund for that year.

See the bulletin here;       https://br.linkedin.com/company/bdo-limited_2

[idun]

[quote user="parsnips"]Hi Pickles,

     What I am saying is that the social security system of the country of last employment is responsible for the payment of the accumulated pensions.

So any pension due in respect of NI paid in the UK is paid , but it is paid via the french "caisse" which pays the french part of the combined pension. You can read the mechanism for combining the pensions in the UK social security abroad leaflet on the UK govt site.

       I do not know whether the UK recompenses the french for the NI portion , but I suspect they do.  In any case, the pensioner gets all the pension payments -from the various regimes- to which he is entitled .

[/quote]

I shall start by saying that as far as I am aware neither the french nor the british actually pay for pensions that have been contributed to in other countries. In our case, they added the years together from both countries and then as that gave a sufficient number of years for a full french pension, then only paid pro rata for the time served in France.

eg 10 years NI contributions

     30 years CRAM contributions

=40 years which would entitle someone to a full french pension.

Then the french played with their figures.... which I still do not quite 'get' and then divided it by 40 x 30 and that is the french pension entitlement. The UK pay nothing towards this.

I'm sure that the UK would do exactly the same. And that is how it works.............. as far as I am aware in all cases.

You are right that one may have to apply to the country one is living in to get the pension from the country where one contributed, ie we had to contact Newcastle initially to get a french pension. Our swedish friend had to apply to Newcastle to get her swedish pension, as she also lives in England. But then Newcastle contact the correct authorities in the country who will pay the pension. In a way it is important to get all this straight as it could affect health care entitlement........ ie Newcastle plagueing us with calls for the french to send an S1, only took them a year to send it!

[Rabbie]

To back up what Idun says. Both Mrs Rabbie and I get our state pension paid by the UK with separate monthly payments from Sweden for the years that we worked there. The application for the Swedish pension was made through the Newcastle office and was pretty straight forward

[parsnips]

[quote user="parsnips"][quote user="Bobdude"]May I also point out that the test case ECJ (EU Pilot 5973/2013) according to valuable information provided by 'Thibaud' (thank you Thibaud) refers to NON-RESIDENT (in France) holders of a UK S1. Before we all get too excited and prepare our reclamation letters!

[/quote]

Hi,

      I agree that excitement would be premature, but BDO Guernsey tax consultants seem to think that the present cases may lead to the exemption of SI holders' investment income. (I well recall that UK pensions were eventually exempted as a result of a case involving only french residents working abroad)  As the 31/12/2014 is the cut off for claims for CSG paid in 2012,  BDO advise a 'provisional' claim, so as to not lose any potential refund for that year.

See the bulletin here;       https://br.linkedin.com/company/bdo-limited_2

[/quote]

Hi,

See here CJE decision on social charges on sales of french real estate by non residents .

http://www.lefigaro.fr/conjoncture/2015/02/26/20002-20150226ARTFIG00104-fiscalite-des-non-residents-la-france-sanctionnee-par-bruxelles.php

The argument they give is that non-members of the french social

security system (ie ,those under a foreign system) should not have to

pay french social charges; they have also ruled that for them CSG CRDS

are cotisations and not , as the DTT says, taxes, so EU reg 1408/71

applies.

A case still under review by Brussels makes the same argument for all

the income of UK SI form holders in France (as I have referred to in

previous posts).

It seems to me that the implication of today’s decision – that in

all situations the CSG and CRDS are not taxes but social cotisations for

defined benefits-, opens the possibility of exemption from french

social charges of the investment income of UK SI holders in France.

[cajal]

[quote user="parsnips"]Hi,

I have just read in the BDO (tax consultants’) bulletin that there is a

case at the ECJ (EU Pilot 5973/2013) contesting the application of

french ‘social charges’ to the investment income of french resident UK

state pensioners (with S1) on the same grounds that their pensions are

exempted.[/quote]

On 9th Feb, following a claim we made in December, all of the 'social charges' levied on our investment income for 2013 was refunded by the tax authorities.

Regards

cajal

[powerdesal]

Wow !!!!

cajal,

I have read the thread and, because it seemed to relate to charges on 2012 investment income, which didn't involve us, I tended to ignore it.

You have claimed for a refund on 2013 income, that is very relevant to us as we paid a substantial amount.

Could I ask you to outline the 'mechanics' of claiming for the charges made on 2013 income, as paid in 2014.

Regards

Steve

[parsnips]

[quote user="cajal"][quote user="parsnips"]Hi,

I have just read in the BDO (tax consultants’) bulletin that there is a

case at the ECJ (EU Pilot 5973/2013) contesting the application of

french ‘social charges’ to the investment income of french resident UK

state pensioners (with S1) on the same grounds that their pensions are

exempted.[/quote]

On 9th Feb, following a claim we made in December, all of the 'social charges' levied on our investment income for 2013 was refunded by the tax authorities.

Regards

cajal

[/quote]

Hi,

      It is currently the case that in certain circumstances,  social charges on dividends may be refunded , under existing provisions of the DTT.   This is where the credit for UK tax paid ( the 17.7% calculated on form 2047)  exceeds the amount of  income tax due on the global income.   The 17.7% credit should then be appllied  wholly or in part to the social charges due on those dividends.  (This  is nothing to do with S1, and applies to everyone.)

      Needless to say , not all tax offices are aware of this.

[Fittersmate]

Parsnips/cajal - would be very interested in further info on how to make/word a claim and/or a link to the relevant part of the DTT which we could quote to our tax office who are probably not aware of this or choose to ignore it.

Thanks

[parsnips]

[quote user="Fittersmate"]Parsnips/cajal - would be very interested in further info on how to make/word a claim and/or a link to the relevant part of the DTT which we could quote to our tax office who are probably not aware of this or choose to ignore it.

Thanks[/quote]

Hi,     2047 (Notice )  page 2 Section III   A  -" MODALITES ....ETC".....  para 3);

        I have a case based on this before the Trbunal Administratif  at Poitiers , and will let you know the outcome .  In the first instance make a claim to your tax office , quoting the above.