High court rules that social contributions are covered by tax treaties

This article was first published on Tax@Hand, and is reproduced on this blog with the authorization of its authors.


The French Administrative Supreme Court ruled on 14 April 2022 that French social contributions paid by individuals on their income can be likened to income tax for the purpose of applying the treaty between France and Brazil (Conseil d’Etat, 14 April 2022, n° 455943).

In 2008, a French tax resident sold shares of a Brazilian real estate company and realized a capital gain.

According to the French tax authorities (FTA), the capital gain was taxable in France and the taxpayer was also expected to be subject to French social contributions on the capital gain (“prélèvements sociaux,” such as the generalized social contribution or the social security debt contribution).

The taxpayer argued that these French social contributions were not applicable due to the fact that they were not covered by the Brazil-France tax treaty as they were introduced into French law after the tax treaty was concluded.

The French Administrative Supreme Court confirmed the position of the FTA.

As a reminder, the treaty between France and Brazil states that it “shall also apply to any identical or substantially similar taxes which are subsequently imposed in addition to, or in place of, the existing taxes” (article 2(1)(b)).

The French Administrative Supreme Court ruled that the French social contributions were identical or substantially similar to the income tax referred to in the list of covered taxes provided for by the tax treaty. Therefore, it concluded that they should be likened to income tax for purposes of applying the treaty.

This decision is in line with the position of the FTA, which usually considers that French social contributions should receive the same treatment as income tax for the purpose of applying the tax treaties concluded by France, unless it is explicitly stated otherwise.

Nathalie Aymé

Nathalie Aymé, Partner, specializes in domestic and international tax law. She regularly advises French and international companies especially in the manufacturing and the telecom & technology sectors. She assists her […]

Thomas Perrin

Thomas Perrin, Partner, specializes in international tax. He has been involved in many transactions for international French and foreign groups. In 2004, he created the R&D department as well as […]

Sophie Tardieu

Sophie Tardieu is a partner in the international tax department of Deloitte Société d’Avocats. With over 25 years’ experience in corporate taxation, Sophie advises French and foreign multinational companies in […]

Grégoire Madec

Grégoire Madec, Partner, has over 20 years of experience in corporate tax. He mainly assists multinational groups in the definition of their tax strategy as well as in the management […]

Alice de Massiac

Alice de Massiac, Partner, has developed extensive expertise in supporting major French and foreign multinational companies, both in consulting and tax controversy, anticipating the impact of the proposed recommendations in […]