France Payroll Guide
HR & Payroll in France
Good to know
- Local currency: Euro (EUR)
- Minimum Salary: 1,801.80 € gross/month | 1,426.30 € net/month (Source: service-public.fr). The minimum salary will be automatically increased by 2.01% on August 1, 2022. .
- Salary Calculation: gross to net
- Legal Working Hours: 35 hours/week (this may vary according to collective labour agreements)
About France
France is part of Europe. It has more than 67 million residents. The country offers excellent opportunities as the EU’s second-largest economy and export power. For an employer, there are several challenges in doing business in France because of the complex social security system. The general plan is based on a hierarchy of national, regional and local organisations, structured by nature of risk, managed on a parity basis and placed under the supervision of the Ministries in charge of social security (Ministry of Solidarity and Health and Ministry of Economy, Finance and Industrial and Digital Sovereignty). Understanding French legislation when it comes to HR and payroll is crucial to ensure compliance.
Income Tax in France
Since January 2019, income tax is deducted at source by the tax authorities in France. For a large majority of French taxpayers, income tax is composed of personal income tax (IRPP), the generalised social contribution (CSG) and the contribution for the reimbursement of the social debt (CRDS), the latter two forming the social levies.
To find out the amount to be deducted, the taxpayers makes their declaration in the spring of their annual income for the previous year and send it to the tax authorities. The declaration is made as follows: gross annual income minus dependants, deductible expenses, expenses giving entitlement to a tax credit, etc. Once the declaration is done, the taxpayers know their tax rate.
On January 1 of the following year, the rate is applied to the salary and appears on the pay slip. Any change in personal circumstances (marriage, birth, etc.) must be reported immediately to the tax authorities, which will change the rate of deduction. It is also possible to choose a personalised rate.
Income Tax in France
The UK’s general social security system includes sickness and maternity, old age, disability and survivors’ insurance, occupational accidents and diseases, unemployment, and family benefits. Some benefits are residence-based, and others are work-based.
Contributory benefits are generally flat rate.
Withholding tax rates
| Monthly debit basis | Applicable rate |
|---|---|
| Less than 1,591 euros | 0 % |
| Greater than or equal to €1,591 and less than €1,653 | 0,5 % |
| Greater than or equal to €1,653 and less than €1,759 | 1,3 % |
| Greater than or equal to €1,759 and less than €1,877 | 2,1 % |
| Greater than or equal to €1,877 and less than €2,006 | 2,9 % |
| Greater than or equal to €2,006 and less than €2,113 | 3,5 % |
| Greater than or equal to €2,113 and less than €2,253 | 4,1 % |
| Greater than or equal to €2,253 and less than €2,666 | 5,3 % |
| Greater than or equal to €2,666 and less than €3,052 | 7,5 % |
| Greater than or equal to €3,052 and less than €3,476 | 9,9 % |
| Greater than or equal to €3,476 and less than €3,913 | 11,9 % |
| Greater than or equal to €3,913 and less than €4,566 | 13,8 % |
| Greater than or equal to €4,566 and less than €5,475 | 15,8 % |
| Greater than or equal to €5,475 and less than €6,851 | 17,9 % |
| Greater than or equal to €6,851 and less than €8,557 | 20 % |
| Greater than or equal to €8,557 and less than €11,877 | 24 % |
| Greater than or equal to €11,877 and less than €16,086 | 28 % |
| Greater than or equal to €16,086 and less than €25,251 | 33 % |
| Greater than or equal to €25,251 and less than €54,088 | 38 % |
| Greater than or equal to 54,088 euros | 43 % |
Source: bofip.impots.gouv.fr
The French Social Protection System
The French social protection system is essentially composed of statutory plans
General plan covers employees and self-employed (non-agricultural) workers as well as other categories (students, beneficiaries of universal protection, residence-based illness).
Plan specific to salaried and non-salaried workers in the agricultural sector, which covers these workers against all risks
Special plans for certain non-agricultural employees provide protection against certain specific risks or all risks.
Autonomous basic old-age plans are supplemented by compulsory supplementary plans.
Unemployment plan covers all employed persons. It is managed by joint bodies.
Supplementary pension plan (AGIRC-ARRCO), which is compulsory for all private sector employees covered by the general or agricultural plan and which supplements the basic plans.
The French Social Protection System
Employer & Employee Contributions
| Risks | Employee’s share (rate and ceiling/month) | Employer’s share (rate and ceiling/month) |
|---|---|---|
| Social Security | ||
| Sickness, maternity, disability and death insurance (1) | – | 13% or 7% on the full salary |
| Autonomy solidarity contribution (CSA) | – | 0,3% on the full salary |
| Old-age insurance (capped) (2) | 6,9% 3 428€ (2) | 8,55% 3 428€ (2) |
| Old-age insurance | 0,4% on the full salary | 2.02% of total salary |
| Accidents at work (3) | – | variable on the full salary |
| Family allowances (4) | – | 5,25% or 3,45% on the full salary |
| Generalised social contribution (CSG) (5) | 9,2% On 98.25% of gross salary | – |
| Contribution for the reimbursement of the social debt (CRDS) (5) | 0,5% On 98.25% of gross salary | – |
| Unemployment (6) | – | 4,05% 15 456 € |
| AGS (6) | – | 0.20% 15 456 € |
| Supplementary pensions (Agirc-Arrco plans) (7) | ||
| * 1st Tax Bracket | 3,15% 3 864 € | 4,72% 3 864 € |
| CEG (General equilibrium contribution) | 0,86% 3 864 € | 1,29% 3 864 € |
| * 2nd Tax Bracket | 8,64% from 3 864 € to 30 912 € | 12,95% from 3 864 € to 30 912 € |
| CEG (General equilibrium contribution) | 1,08% from 3 864 € to 30 912 € | 1,62% from 3 864 € to 30 912 € |
Employer's contribution rate for health, maternity, disability and death insurance
- (1) For employers eligible for the general reduction, the rate of the employer’s contribution to “health, maternity, disability and death insurance” is set at 7% for their employees whose remuneration does not exceed 2.5 times the amount of the minimum wage in force on 31 December 2023.
Social security ceiling
- (2) The monthly social security ceiling in 2024 is 3,864€.
Accidents at work
- (3) The rate varies according to the size and risks of the companies.
Family allowances
- (4) The rate of 3.45% applies to companies eligible for the general reduction in contributions and for annual remuneration less than or equal to 3.5 times the minimum wage.
CRDS & CSG
- (5) The Social Security Financing Act for 2018 increased the CSG rate applicable to earned income by 1.7 percentage points (from 7.5% to 9.2%) and the one applicable to retirement and disability pensions. For these pensions, law n°2018-1213 of 24 December 2018 on emergency economic and social measures introduced a new intermediate rate, bringing to 4 the different rates applicable according to the reference tax income (RFR) of the year N-2. Persons who are affiliated to the French system but who are not domiciled in France for tax purposes are not subject to the CSG and CRDS. However, they are liable to pay a health insurance contribution, employee’s share, at the rate of 5.5% on their full salary. The CSG and CRDS at the respective rates of 6.2% and 0.5% are also levied on replacement income (daily allowances, unemployment benefits, etc.).
Unemployment
- (6) The ceiling applied corresponds to 4 monthly social security ceilings (4 x €3,864). AGS: association for the management of the employee debt guarantee plan. Exclusively payable by the employer, it finances the wage guarantee plan which, in the event of receivership or judicial liquidation, ensures the payment of employees’ wages, notice and compensation.
Supplementary pensions (Agirc-Arrco plans)
- (7) On January 1, 2019, the Agirc and Arrco plans merged. Compulsory supplementary pension contributions are now calculated on the basis of two brackets for all employees, whether executives or non-executives:
The first bracket is between the first euro and the amount corresponding to a Social Security ceiling,
The second bracket is between the amount of the Social Security ceiling and the amount corresponding to 8 Social Security ceilings.
The contribution call rate (127%) generates additional contributions without increasing the pension entitlement. Points are calculated on the basis of the contractual rate. For bracket 1, whose overall rate is 7.87%, only 6.20% is taken into account to calculate the employee’s pension points. The rest contributes to the financing of the plan.
In addition to the contributions indicated
the APEC contribution, which concerns only executive employees, on remuneration limited to 4 times the social security ceiling. Its overall rate is 0.06%.
The CET (Contribution for technical equilibrium), which applies to executives and non-executives whose remuneration exceeds the monthly social security ceiling (employee share of 0.14% and employer share of 0.21%)
Source : Le Cleiss
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