US Taxpayers Can Claim Refunds for French Social Taxes

The IRS recently announced that U.S. Taxpayers have 10 years to file for refunds of "social taxes" they paid on income earned in France over the past decade.

The 10-year period for filing a claim begins the day after the regular due date for filing the return for the year to which the foreign taxes relate, the IRS said in a statement.

Freeman Tax Law can Help Prepare Your Amended Returns

If you have paid Social Taxes - also known as CSG or CRDS - on income earned in France over the last decade, you are more than likely due a refund.  Please contact our office to schedule a free consultation to see if you should amend your prior tax returns.

French Social Taxes Explained

Since its creation in 1945, the French Social Security System is mainly financed by social contributions, i.e. deductions from wages. Until recently, there was no wide taxation on social expenditure, contrary to most of its European partners.

In order to find a solution to the problems of financing of the social security, governments have had to broaden its range of resources by the introduction of additional tax, notably the general social contribution (CSG) and the repayment of the debt of social security (CRDS) at a rate of 0.5%, to repay the debt of the ASSO.

Established by the Finance Act 1991, the general social contribution (CSG) is payable by individuals living in France and who benefit from the compulsory health insurance.

Revenues from the CSG are allocated to social security budget, specifically to the National Family Allowance, the Solidarity Fund pension schemes and insurance.

Indeed, unlike the social contributions that give those who pay a right to benefit from them, the CSG, is levied without direct compensation (like any other tax).

The CSG has a very broad base as it applies in principle to earnings and income from wealth. The CSG is composed of three separate contributions. Incomes from work are taxed at 7.5%. The rate applied to income from investments is 8.2%. It also applies to financial investment , with exceptions for certain untaxable products.

The contribution to the social debt (CRDS) was created in 1996. Like the CSG, it applies to earnings and to income from wealth. It was initially established for a period of 13 years, but this time limit was abolished in 2004. The territorial scope of the CRDS is the same as the CSG: thus, CRDS is paid by individuals living in France who benefit from a compulsory insurance scheme. The rate is 0.5%. The base of the CRDS is somewhat broader than the CSG, for it includes incomes exempted from CSG such as family benefits or housing allowances.