Constitutionality of the social contributions on “multi-supports” life insurance policies

September 27th 2015

The social contributions, over time, on the revenues generated by euro funds of “multi-supports” life insurance policies are constitutional.

As mentioned in a previous article, the Conseil d’Etat transmitted, last June, to the Conseil Constitutionnel a petition for preliminary ruling on constitutionality on the taxation, at the date of registration, of the social contributions on the revenues generated by “multi-supports” life insurance policies expressed in euros or currencies.

The taxpayer who filed this petition invoked a breach of the taxpayer’s capacity to contribute characterising a breach of the principle of equality of all in relation to the discharge of public burdens guaranteed by the Declaration of the Human and Civil Rights.

For the taxpayer, this breach was demonstrated by the fact that the taxation is applicable to revenues that are neither acquired nor available on the year of taxation, insofar as these revenues may, on the one hand, be reinvested by the subscriber on unit-linked supports and be subjected to fluctuations and, on the other hand, be absorbed with the losses of the unit-linked support’s sub-fund.

The Conseil Constitutionnel ruled on September 17th, 2015 (ruling no. 2015-483) that the taxation rules for social contributions of “multi-supports” life insurance policies do not disregard the principle of equality of all in relation to the discharge of public burdens as:

- The taxpayer does not have to disburse the sums necessary for the payment of the social contributions since the taxation is paid through the withdrawal of a fraction of the revenues temporarily registered on the account,
- The mechanism also provides for the repayment of the social contributions in case of an overpayment recorded at the termination of the policy.

However, the Conseil Constitutionnel also issued an important reservation by mentioning that, considering the duration of the contracts that the lawmaker intends to encourage, these taxation rules are only constitutional subject that the taxpayer concerned by repayment “is eligible to default interests at the legal rate on the excess taxation that is repaid […] for the period between the date of payment of the excess taxation and the date of repayment of the excess taxation.”

N.B.: the calculation of the legal interest rate has been modified since January 1st, 2015. It is now updated once by semester and not once a year anymore. The objective is to make the legal interest rate more representative of the refinancing cost borne by creditors. In 2014, its calculation method had led to an annual rate close to zero (0.04%). For the 1st semester 2015, the rate is set at 4.06% for individual creditors.

Céline Thimonier