Until the 31st of December 2020, which marked the end of the transition period, British nationals who reported for their social security from the NHS could, on the basis of Community Regulation 883/2004, obtain the refund of levies on their Income from French sources (including capital gain or rental income).
This action on the basis of EU law is no longer open to them since the 1st January 2021 due to the UK’s final exit from the European Union.
The European Court of Justice had already ruled that when a person is affiliated with a social security scheme other than an EU or EEA member state or Switzerland, the Member State can make capital levies whereas an EU national under a social security scheme in another Member State is exempt. (ECJ 18 January 2018, Jahin, C-45/17).
In other words, persons under the social legislation of a third state in the EU, the EEA or Switzerland cannot benefit from the refund of the social levies charged to them.
Can the Trade and Cooperation Agreement signed on the 24th December 2020 between the EU and the United Kingdom, which came into force on the 1st of January 2021, be an alternative legal basis to EU Regulation 883/2004 to obtain the refund of social levies?
Everything suggests that it is.
The following arguments argue in favour of a right to reimbursement for British nationals affiliated with the NHS.
I. The scope of the social security agreement
The preamble to the agreement refers to an objective of social security coordination: the United Kingdom and the EU recognize “the importance of coordinating the social security rights of persons moving between the Parties to work, stay or reside, as well as the rights of their family members and their survivors”
A/ Scope of application
In doing so, the agreement includes, in appendix, a Protocol on Social Security Coordination. The latter applies “to persons, including stateless persons and refugees, who are or have been subject to the legislation of one or more States, as well as to members of their families and their survivors”
Article Ch.SSC.3 of the agreement specifies that
“1. The Protocol on Social Security Coordination shall only apply to situations arising between one or more Member States of the Union and the United Kingdom.
2. The Protocol on Social Security Coordination shall not apply to persons whose situations are confined in all respects either to the United Kingdom, or to the Member States.”
As to the material scope of application of this regulation, Article SSC.3 includes “(a) sickness benefits; (b) maternity and equivalent paternity benefits; (c) invalidity benefits; (d) old-age benefits; (e) survivors’ benefits; (f) benefits in respect of accidents at work and occupational diseases; (g) death grants; (h) unemployment benefits; (i) pre-retirement benefits.”
B/ Maintaining the principle of single applicable legislation
Just like Regulation 883/2004, which served as a basis for the claim for reimbursement, the Protocol lays down the principle of single applicable legislation, in its Article SSC.10:
“Persons to whom this Protocol applies shall be subject to the legislation of a single State only. Such legislation shall be determined in accordance with this Title.”
Point 3 of the same Article states that:
3. Subject to Articles SSC.12 [Pursuit of activities in two or more States] and SSC.13 [Voluntary insurance or optional continued insurance]:
(a) a person pursuing an activity as an employed or self-employed person in a State shall be subject to the legislation of that State;
(b) a civil servant shall be subject to the legislation of the State to which the administration employing them is subject;
(c) any other person to whom points (a) and (b) do not apply shall be subject to the legislation of the State of residence, without prejudice to other provisions of this Protocol guaranteeing them benefits under the legislation of one or more other States.
Under these provisions, persons employed, self-employed or retired in the United Kingdom can only be covered by United Kingdom social legislation.
Under these conditions, are they required to pay French social security contributions (CSG / CRDS) on their French-source income to finance France’s compulsory social security schemes?
C/ Exemption from social security contributions (CSG / CRDS) for income from the assets of British taxpayers in France
From 1st January 2021, British residents who fall under the NHS for their social security should be able to claim exemption from the General Social Security Contribution (CSG at a rate of 9.20%) and the Social Debt Repayment Contribution (CRDS at a rate of 0, 5%) based on income from assets since the agreement of December the 24th 2020 between the United Kingdom and the European Union includes the same principle of the single social legislation as that contained in European Regulation (EC) No. 883/2004 on the coordination of social security systems.
As a result, income from the assets would not have to be subject to social security contributions at the overall rate of 9.70%.
This conclusion is based on the same reasoning that the European Court of Justice followed in its famous “De Ruyter” decision.
This case law was based on the “direct and relevant link” between levies on income from assets (such as CSG and CRDS) and the financing of compulsory social security schemes covered by the former Regulation 1408/71, replaced by Regulation 883/2004 on the coordination of social security schemes.
However, the Protocol on social security coordination attached to the 24th December 2020 agreement between the European Union and the United Kingdom covers exactly the same social security branches as Regulation 883/2004 (excluding family benefits).
Article SSC.3 of the Protocol thus reproduces almost word for word Article 3 of Regulation 883/2004.
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Article SSC.3 of the Protocol “This Protocol shall apply to the following branches of social security: (a) sickness benefits; (b) maternity and equivalent paternity benefits; (c) invalidity benefits; (d) old-age benefits; 1166 (e) survivors’ benefits; (f) benefits in respect of accidents at work and occupational diseases; (g) death grants; (h) unemployment benefits; (i) pre-retirement benefits.” |
Article 3 of Regulation 883/2004 “This Regulation shall apply to all legislation concerning the following branches of social security: (a) sickness benefits; (b) maternity and equivalent paternity benefits;(c) invalidity benefits; (d) old-age benefits; (e) survivors’ benefits; (f) benefits in respect of accidents at work and occupational diseases; (g) death grants; (h) unemployment benefits; (i) pre-retirement benefits; (j) family benefits.” |
In the same way, Article SSC.10 corresponds exactly to Article 11 of Regulation 883/2004 on single applicable law:
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Article SSC.10 of the Protocol “Persons to whom this Protocol applies shall be subject to the legislation of a single State only. Such legislation shall be determined in accordance with this Title.” |
Article 11 of Regulation 883/2004 “Persons to whom this Regulation applies shall be subject to the legislation of a single Member State only. Such legislation shall be determined in accordance with this Title.” |
Unlike other third countries, the United Kingdom is thus bound to the European Union by a Protocol on Social Security Coordination, annexed to the Trade and Cooperation Agreement in force since the 1st of January 2021, which sets as a guiding principle a principle of uniformity of applicable legislation
While the United Kingdom would become a third state not subject to Regulation 883/2004, the continuation in the Protocol of the guiding principle of this regulation, i.e. the single applicable legislation and the identical listing of the same social security branches, which have a “direct and relevant link” with the CSG-CRDS levies, should lead to the exemption from these social contributions of those falling under British social legislation.
For the record, this exemption currently profit taxpayers who fall under Swiss law while the Swiss confederation is not a member of the European Union.
There is, however, a difference between Swiss and British taxpayers.
Unlike the latter, the former is exempt from social levies (CSG and CRDS) under direct EU law
Indeed, the social security relations between the EU and Switzerland are governed by the Agreement of 30th of April 2002 between the European Community and its Member States, on the one hand, and the Swiss Confederation, on the other hand, on the Free Movement of Persons.
Under this agreement, the contracting parties have agreed to apply to each other, in the field of the coordination of social security systems, Regulation 883/2004, which allows a Swiss social security taxpayer to directly avail himself of the contents of this Community regulation with the French tax administration.
Unlike the agreement between Switzerland and the European Union, the trade and cooperation agreement between the United Kingdom and the European Union does not refer to the Regulation.
However, do UK taxpayers have the possibility of claiming refunds directly on the basis of the Protocol on Social Security Coordination annexed to the agreement of 24 December 2020?
But do British taxpayers have the opportunity to claim refund directly on the basis of the Protocol on Social Security Coordination attached to the agreement of 24th of December 2020?
II. A possible action for reimbursement on the direct basis of the Protocol
The United Kingdom wished to guard against any direct effect of the agreement, which is designated as a treaty under international law not subject to European law. This is the purpose of Article COMPROV.13 § 1 of the agreement:
“1. The provisions of this Agreement and any supplementing agreement shall be interpreted in good faith in accordance with their ordinary meaning in their context and in light of the object and purpose of the agreement in accordance with customary rules of interpretation of public international law, including those codified in the Vienna Convention on the Law of Treaties, done at Vienna on 23 May 1969.”
Thus, Article COMPROV.16 of the agreement excludes in principle direct effect:
“1. Without prejudice to Article MOBI.SSC.67 [Protection of individual rights] and with the exception, with regard to the Union, of Part Three [Law enforcement and judicial cooperation ], nothing in this Agreement or any supplementing agreement shall be construed as conferring rights or imposing obligations on persons other than those created between the Parties under public international law, nor as permitting this Agreement or any supplementing agreement to be directly invoked in the domestic legal systems of the Parties. 2. A Party shall not provide for a right of action under its law against the other Party on the ground that the other Party has acted in breach of this Agreement or any supplementing agreement.”
Nevertheless, Article SSC.67, contained in the Protocol on Social Security Coordination, provides an exception concerning individual rights:
“1. The Parties shall ensure in accordance with their domestic legal orders that the provisions of the Protocol on Social Security Coordination have the force of law, either directly or through domestic legislation giving effect to these provisions, so that legal or natural persons can invoke the said provisions before domestic courts, tribunals and administrative authorities.
2. The Parties shall ensure the means for legal and natural persons to effectively protect their rights under this Protocol, such as the possibility to address complaints to administrative bodies or to bring legal action before a competent court or tribunal in an appropriate judicial procedure, in order to seek an adequate and timely remedy.”
It is therefore up to each State to ensure that the Protocol has the force of law, either directly or through legislative provisions transposing it. The aim, in any event, is to enable litigants to avail themselves of the provisions of the Protocol before national administrations and courts. Under these provisions, the British taxpayer should be entitled to invoke the content of the law- binding protocol to obtain restitution of the CSG and the CRDS
Conclusion:
On the basis of the Protocol on social security coordination annexed to the Trade and Cooperation Agreement signed on 24 December 2020 between the EU and the UK and which came into force on 1 January 2021, taxpayers who come under the NHS are entitled to claim back the CSG and CRDS they paid on their French source income.
On the basis of the Protocol on social security coordination attached to the Trade and Cooperation Agreement signed on the 24th of December 2020 between the EU and the United Kingdom and which came into force the 1st January 2021, taxpayers under the NHS are entitled to claim the refund of the CSG and CRDS they paid on their French-sourced income.
The Strasbourg-based law firm GOFFIN VAN AKEN has successfully carried out mass actions on behalf of UK taxpayers to obtain on their behalf the reimbursement of social security contributions on their income from assets in France.
CONTACT US TO START THE ACTION FOR THE REIMBURSEMENT OF CSG, CRDS AND OTHERS SOCIAL SECURITY
Clint Goffin van Aken
Avocat