The resource

CRDS

Definition :

The CRDS ( Contribution au remboursement de la dette sociale ) was introduced in 1996 to provide CADES with revenue to amortize its assumed debt. This 0.5% tax is levied on all earned and replacement income as well as on capital gains from property, investments, the sale of precious metals and gaming.

Exemptions mainly involve replacement income such as minimum income allowances and certain non-contribution-based benefits. These principally include unemployment, early retirement, disability and retirement benefits that are not subject to income tax and the guaranteed minimum income (RMI).

References

Relevant legislation

Act No. 2004-810 of August 13, 2004, reforming the public health insurance system.
Order No. 96-50 dated January 24, 1996 relating to repayment of the social security debt
Decree No. 96-353 dated April 24, 1996 relating to CADES (Caisse d'amortissement de la dette sociale)

Types of income subject to the CRDS levy

Earned income
Replacement income
Income from personal long-term assets
Income from investments
Sale of precious metals, objects and stones
Gains from games, betting on horse races and casino winnings

In particular, the income of the non-taxable unemployed and retired, the guaranteed minimum income (RMI), and interest on certain savings accounts are exempt from this tax. The Act of July 30, 2004, broadened the tax base from 95% to 97%; accordingly, CRDS revenues are expected to swell by approximately 50 million euros per year.

Earned income

Wages and similar income
Fringe benefits
Compensation (end of contract, paid leave, termination)

Replacement income

Unemployment and early retirement benefits*
Retirement and disability pensions*
Housing allowances
Family allowances
Sickness benefits

* Subject to certain tax conditions

Income from personal
long-term assets

Income from real estate
Capital income
Interest and capital gains from stocks and investments

Investment income

Bonds
Mutual-type funds (including money market funds)
Negotiable debt instruments
Negotiable debt instruments
Interest on various types of savings plans, life insurance and stock-based plans

Flow of CRDS payments to CADES

Click to zoom the picture above

Key CRDS figures

Change in CRDS from 1996 to 2008

Distribution of CRDS receipts by source of income from 1999 to 2008

The preceding graph shows changes in the distribution of CRDS receipts by source of income. There was virtually no change between 1999 and 2000. In the Finance Act of 2001, exemptions were granted to the non-taxable unemployed and retired, reducing the share of replacement income from 25 to 20%.

CRDS tax on replacement income totalled EUR 1,100 million in 2000. Taking the 5% increase into account, CRDS receipts from replacement income should have reached EUR 1,155 million in 2001. In fact, only EUR 875 million was actually collected in 2001, a shortfall of EUR 280 million.

The graph also shows a clear decline in CRDS receipts from income earned on long-term assets and investments, due to the sharp decline in capital gains as a source of household revenue in 2001.