The French social security system is complex and includes a wide range of employee benefit schemes that include basic social security coverage, unemployment benefits, compulsory complementary retirement plans, complementary death and disability coverage, and complementary health coverage.
Employers and employees share contributions to the social security system. The employer's contributions depend on the business type, size and location, but on average, they are 40% of the employee's gross salary. The employer withholds the employer's and employee's share of French social security charges.
The monthly social security ceiling value in 2020 is €3,428 and the daily value is €189, for a total annual ceiling at €41,136. The unemployment and health contributions are gradually being eliminated, while the CSG contributions are being increased to compensate for their elimination.
|BENEFIT||% OF EMPLOYEE'S GROSS SALARY|
|Health, maternity, invalidity, death insurance*||13%|
|Old age insurance**||8.55%|
|Family allowances||3.45% or 5.25%|
|Autonomy Solidarity Contribution (CSA)||0.3%|
|AGS (Wage Guarentee Insurance)**||0.15%|
|Social dialogue contribution||0.016%|
|Fnal||0.5% if more than 50 employees; 0.1% if less|
Rate of 7% for employees whose remuneration does not exceed 2.5 times the amount of the minimum wage calculated over one year.
** Ceiling of €3,428.
*** Celling of €13,712.
On top of the social security contribution “health, maternity, invalidity, death insurance”, employers must make additional contribution to a private health insurance (mutuelle) for all employees. The cost of the insurance varies depending on the benefits and the insurance provider. The Company is required to pay for at least half of the cost.
Besides the government-mandated old-age insurance that both employers and employees contribute to, companies must also provide employees with a supplementary pension. Contributions are 1.9% of gross salary for pension insurance without a monthly ceiling.
Provident insurance (prévoyance) is a widespread life insurance in France, which covers people for accidents that may result in injury or death. Companies are required to extend provident insurance to all managers. If a manager passes away and the company hadn't provided the insurance, they have to pay out the family three times the annual Social Security ceiling.
Depending on the industry and the applicable CBA branch, implementing the Provident insurance for all employee categories may be mandatory.
The rate varies according to industry, risk and company size. Employers need to make contributions based on the total assessed cost of employee insurance, which considers the evaluated degree of risk. The French Pension and Occupational Health Insurance Fund notifies employers of their rates annually, which averages at 2.22% for office-based workers and 1.90% for employees working from home.
The following remunerations do not require a social package tax contribution from employers:
Companies in certain industries must pay an additional tax of 0.68% and contribute 0.55% (if employing less than 11 people) or 1% (if employing 11+) to the training tax.
This tax is applicable for companies with 11 or more employees based in the Île-de-France region (Paris and its surroundings) or within the scope of a transport organising authority (AOT) where mobility payments are subject to a contribution. This contribution finances public transport and is capped at 2.95% in Paris. The collection of this contribution depends on company size and location.
All private companies who employ workers must declare the number of disabled workers within the company. The workforce of companies with 20+ employees should be comprised of at least 6% employees with disabilities. There is a broad definition of a disability which covers any degradation of at least one physical, sensory, mental or psychic function that diminishes the possibility of obtaining or keeping a job. A company not fulfilling this employment obligation must pay a financial contribution to Agefiph equal to €4,060 per missing employee. Calculator to simulate the contribution.
Companies that do not respect the declaration deadline risk penalties of up to €15,225, increased by 25% per missing employee.
French residents pay tax on their worldwide income, while non-residents do so only on their income earned in France. To be considered a French resident, an individual's home must be in France; their principal place of abode must be France; they should carry on the professional activity in France, or France must be the centre of economic interests.
Personal income tax is assessed using the household's total income – it is not calculated per individual. The calculation is adjusted to personal circumstances through an income splitting system and by applying tax credits for some personal expenses. Income splitting allows for dependents to be taken into account. It also allows for cushioning progressive taxation effects by applying the progressive rate to only the taxable income part.
Income that is subject to income tax:
Employers withhold income tax directly from the employees' salary after most social security contributions have been deducted. It's then sent to the French tax administration ("Direction Générale des Finances Publiques").
|GROSS INCOME||PROGRESSIVE TAX RATE (%)|
|Up to €10,084||0|
|€10,084 - €25,710||11|
|€25,710 - €73,516||30|
|€73,516 - €158,122||41|
|More than €158,122||45|
Married individuals file a joint tax return, with no option to file separately after the year of marriage or before the year of divorce.
An additional 3% contribution applies to income that exceeds €250,000 (single) and €500,000 for married couples, and 4% for income exceeding €500,000 (single) and €1,000,000 for married couples.
An allowance equal to 10% of the taxable employment income and capped at €12,652 per year is available to employees to cover professional expenses. An employee may elect to deduct the actual professional expenses incurred instead of the 10% standard deduction. In this case, all expenses that the employer reimburses must be added back to the taxable salary.
Qualifying professional expenses include certain commuting expenses, meals taken while away from home, and professional documentation. Professional advice should be sought before choosing any option to deduct actual costs since various conditions must be met to ensure deductibility.
In contrast to most European countries, where the social security system is financed through general taxation, the system in France is funded through social security contributions, which are divided between employers and employees. Every employee contributes to old age insurance, pension and what are known as contributions sociales that include Contribution Sociale Généralisée (CSG) and Contribution au Remboursement de la Dette Sociale (CRDS). These charges are technically not a social security contribution, as they do not generate an entitlement to social security benefits, although CSG goes towards funding health care in France. Employers hold and send to the authorities the employee’s contribution when doing payroll.
|BENEFIT||% OF EMPLOYEE'S GROSS SALARY|
|Generalized social contribution (CSG)||9.2%|
|Old age insurance*||6.9%|
|Contribution for the reimbursement of social debt (CRDS)||0.5%|
*Ceiling of €3,428.
Employees in non-managerial positions must contribute a minimum of 3.1% and a maximum of 8.1% of their gross income to supplement their pension. Employees in managerial positions contribute between 3.1% and 7.8%.
Established in 2019, CEG (Contribution d’Equilibre Général) is part of the balanced contributions to the supplementary pension scheme. The contribution is 1.29% up to the ceiling, 1.62% between one and eight times the ceiling for managers and non-managers. In the table above, CEG is combined with the rates for supplemental pension.
The market value of benefits in kind is added to the total taxable income except the following: