From France: A New 8% Contribution on Passive Income to Finance French Health Insurance System
Denis Fontaine-Besset & Nicole Goulard - STCPartners, a member firm of Andersen Global
The 2016 French Social Security Finance law implemented a new French healthcare system on January 1, 2016, known as Protection Universelle Maladie (PUMA) which provides for an automatic and continuous right to healthcare for every individual who works or lives legally in France.
In the meantime, the same law has introduced a new social contribution for the financing of PUMA, Cotisation Subsidiaire Maladie (CSM), applicable for the first time at the end of 2017.
Such contribution is imposed at the rate of 8% on passive source income and gains (dividends, interest, real estate income, capital gains…) subject to limited exceptions, to individuals:
- With no professional activity or with income from French source professional activity not exceeding a certain threshold (€3,642 for the year 2016), and
- With passive source income exceeding a certain amount (€9,654 for the year 2016).
French social authorities do not consider exemptions for individuals residing in France but subject to a foreign social insurance scheme.
The CSM is assessed on income reported in the 2016 French income tax return, automatically provided by French tax authorities to French social authorities (URSSAF). The law does not provide for a maximum contribution, whereas contributions to social insurance scheme are usually limited.
For these reasons, it is questionable whether this contribution is constitutional as its application does not ensure a fair treatment between individuals.