The exclusion of intra-Community transfers from the C3S base - an opportunity to be seized by companies?


VAT e-Alert

French version

As a reminder

The French Company Social Solidarity Contribution known as "Contribution Sociale de Solidarité des sociétés" (C3S provided for in Articles L137-30 et seq. of the French Social Security Code) paid at a rate of 0.16%, is based on the overall turnover declared to the tax authorities during the previous calendar year, after application of a tax rebate equal to €19 million.

This contribution is in principle the subject of a single payment due on 1 April which must be made no later than 15 May N+1.

In practice, the C3S base consists of the total annual turnover corresponding to the total of lines 01, 04, 05 and 06 of the VAT returns (CA3) of year N-1.

This base may be reduced by certain transactions that do not represent taxable turnover in France.

In this respect, the question has been raised as to whether taxpayers should be able to exclude intra-Community transfers of goods from the C3S base.

Possibility of excluding intra-Community transfers of goods from the C3S base: a favourable decision of the Paris Court of Appeal of 29/01/2021

By a judgment of 14 June 2018 (Lubrizol France SAS v. National Cause of the Social System of Independents (RSI) No. C39/17) the CJEU had considered that the inclusion in the C3S base of intra-Community transfers of stocks from France was compliant with Union law provided that the following three conditions are met:

  • The value of these goods must not be taken into account once again in the base of this tax at the time of their subsequent resale in the Member State;
  • The value must be deducted from the tax base if such goods are not intended to be sold in the other Member State or have been returned to the Member State of origin without having been sold, and
  • The benefits resulting from the allocation of such contributions do not fully offset the burden borne by the national product when it is launched and marketed on the national market.

On referral from the Court of Cassation (20 December 2018, no. 15-26723), the Paris Court of Appeal, in two judgments of 29 January 2021, Lubrizol no. 19/09480 and Renault Trucks no. 19/10162, draws the conclusions of the CJEU judgment and stresses that such a mechanism for deducting intra-Community transfers from the C3S base is not currently provided for in French law.

In this respect, the Court considers that (i) the current possibility under French law to obtain a refund of the C3S (via a claim) does not constitute a deduction mechanism and that (ii) the adjustments provided for on the lines of the CA3 declaration do not provide for intra-Community stock transfers.

Under these conditions, the Court of Appeal ruled that the turnover constituting the basis of assessment for C3S may be reduced by the amount of intra-Community stock transfers, without limitation to transfers of stocks that have not been sold locally and have been returned to France or destroyed.

Next steps

In order to safeguard their rights, it is recommended that companies anticipate the possibility of excluding intra-Community stock transfers from the C3S base as of today.

Taxpayers may already file a claim with the Union for the recovery of social security contributions and family allowances of Provence-Alpes-Côte d'Azur ("URSSAF"), the organisation responsible for the recovery, control and litigation of the C3S since 1 January 2019, pursuant to Article L.137-32 of the Social Security Code.

This action must be the subject of an opportunity analysis and the compilation of a document file, but may concern the C3S overpaid for 2018 (base 2017), 2019 (base 2018) and 2020 (base 2019).

With regard to the claim for C3S 2018 (based on 2017 turnover), it will be time-barred within 3 years from its actual payment date, which necessarily occurred before 15 May 2018, i.e. a maximum claim deadline of 15 May 2021.

With regard to the C3S 2021 declaration (2020 base) to be filed before 15 May 2021, a review of the calculation of the C3S could be carried out to immediately reduce the amount to be paid. However, a more prudent approach, pending a final position of URSSAF, would always include intra-Community transfers and then filing a new claim.

Finally, we recall that:

  • In response to these claims, URSSAF may request additional information in order to justify the reality of these intra-Community transfers.
  • Companies must ensure that their C3S liquidation bases are correct insofar as URSSAF may request clarification on these bases and other restatements already carried out.
  • Other transactions may be excluded from the C3S basis such as the provision of services covered by Article 44 of the VAT Directive under certain conditions. 


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José Manuel Moreno

José Manuel Moreno

Avocat, Associé TVA & Indirect Tax, PwC Société d'Avocats

Laurent Poigt

Laurent Poigt

Avocat, Associé, TVA & Indirect Tax Technology, PwC Société d'Avocats

Muriel Illouz-Charonnat

Muriel Illouz-Charonnat

Avocat of Counsel, Directrice TVA, PwC Société d'Avocats

Astrid Louvigné

Astrid Louvigné

Avocat, Senior Manager, TVA & Indirect Tax, PwC Société d'Avocats

Zuzana Jandova

Zuzana Jandova

Avocate, Senior Manager, PwC Société d'Avocats