Scorpio Case Stings French Exchequer

The 2006 victory Harald Grams and Dick Molenaar achieved in getting the European Court of Justice to rule in their favor over the unfairness of some member states’ tax laws is beginning to impact, as the French government is having to change the way it treats foreign artists.

In view of the ECJ judgment on the Scorpio case, so called because the tax question it raised was one involving Folkert Koopmans’ Hamburg-based FKP Scorpio case judgment, the French tax authorities have agreed to stop deducting what have been foreign artists’ statutory toward holiday pay.

Foreign artists playing the country obviously don’t get paid holidays from French promoters, but the contributions – known as "Conges Spectacles" – date back to when the government treated touring acts as the employees of those who were putting on the shows.

Article L. 762-1 of the French employment code provided that an entertainer performing live concerts and other events is deemed to be "salaried," and therefore subject to the same social security regime as an ordinary employee in France.

While an artist who is not resident in France could avoid the primary social security contributions by providing proof of coverage under a social security treaty, there were a number of secondary "quasi" social security contributions, including "Conges Spectacles," that were deducted by French promoters for payment to the tax authorities.

The "Conges Spectacles" alone could be up to 14.25 percent of the fee and along with the 2005 abolition of GRISS, a similar contribution artists made toward company retirement plans, the total savings could be about 18 percent of the gross.

In view of the Scorpio case, the ECJ decided that this presumption of salaried status was also in breach of Articles 49 and 50 (formerly Articles 59 and 60) of the EC Treaty in that it deterred an artist from playing France and thereby restricted an artist’s freedom to offer his services throughout the European Union.