The social welfare levies, CSG and CRDS, paid on income and gains were introduced in the 1990s in an attempt to reduce the deficit of the French National Insurance scheme covering illness, maternity and pension benefits.
Their legal nature (tax or social charges) has never ceased to be debated. The Conseil constitutionnel, and the two supreme jurisdictions of France, the Conseil d'Etat (administrative) and the Cour de cassation (civil) seemed to have different views on the matter.
Until 1 August 2012 non-residents were simply exempt from CSG/CRDS as supposedly covered by their own National Insurance schemes. The Government resulting from the general elections of June 2012 (F. Hollande) regarded this exemption as "unjustified" and decided to apply the charges to all residents and non-residents.
The matter went before the CJUE which on 26 February 2015 (C-623/13 de Ruyter) confirmed that CSG/CRDS are social charges, directly connected to the French National Insurance and that charging CSG/CRDS to other non-residents is in breach of Regulation (EU) 1408/71.
The sums retained were generally refunded with interest.
The French Government reacted by reallocating the proceeds of CSG/CRDS to "non-contributory benefits" (i.e. granted to French taxpayers and non-taxpayers alike) as from 1 January 2016. The idea was to technically "disconnect" the contribution from its benefit.
The Administrative jurisdiction was clearly not impressed and confirmed the principles set out by C-623/13 de Ruyter on 31 May 2018 (CAA Nancy 31-5-2018 17NCO2124) ruling the provision unlawful.
The French Government appears to have finally surrendered in the National Insurance Budget 2019 which confirmed that CSG/CRDS should no longer be charged to EU residents.
Once again in theory the sums unlawfully retained since 1 January 2018 should be refunded.
Not entirely however, as the so-called prélèvement de solidarité funding French universal credit remains due and has been increased from 2% to 7.5% as of 1 January 2019.
The Administrative courts and the CJEU may well be busy again.
If you have paid CSG/CRDS and wish to have the current position clarified contact Patrick Delas in our French law team.
 Contribution Sociale Généralisée - Contribution pour le Remboursement de la Dette Sociale
 Loi n° 2018-1203 du 22 décembre 2018 de financement de la sécurité sociale pour 2019