International Tax Ruling: French Social Security Charges (C.S.G. And C.R.D.S.) Are Creditable

FACC Member Fanny Karaman is a Tax Associate at Ruchelman P.L.L.C, and admitted to the New York Bar and Paris Bar. Ruchelman recently alerted clients to an important Washington D.C. ruling regarding the interpretation of imposition for French and taxpayers. View details below or contact Fanny to discuss the implications for your past or future filing. 

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As stated in our June 19 Client Alert, the French contribution sociale généralisée ("C.S.G.") and contribution au remboursement de la dette sociale ("C.R.D.S.") perviously were not considered creditable foreign income taxes since they were considered falling under the provisions of the French-U.S. Totalization Agreement. The U.S. Court of Appeals for the District of Columbia Circuit reversed this holding but remanded the case back to the Tax Court for further review and possible reconsideration. Based on a joint status report recently filed with the Tax Court, the French and U.S. agreed that neither the C.S.G. nor the C.R.D.S. fall under the provisions of the France-U.S. Totalization Agreement.

On June 26, the I.R.S. circulated an agency statement providing that the C.S.G. and the C.R.D.S. were not social “taxes” covered by the Totalization Agreement. The I.R.S. thus does not intend to challenge foreign tax credit claims for these two types of French social charges “on the basis that the Agreement on Social Security applies to those taxes.”

The I.R.S. statement further provides that affected taxpayers have ten years to file a claim for refund. The I.R.S. intends to issue further guidance soon.

FOR MORE INFORMATION

If you would like further information on this topic, please contact Fanny Karaman (click here or log into the FACC Member Directory) or the attorney in the firm with whom you are regularly in contact.