WORKING IN FRANCE
The most transparent, accurate and reliable contract management company in the market.
AFI France Sàrl, part of the AF International group, is a specialist provider of contract management solutions for contractors working in France.
France is a very technologically advanced country, with many job opportunities for highly qualified IT consultants. If you are considering a work contract in France, there are many benefits in doing so. France is known for its extensive welfare benefits that even the self-employed and personal service company (PSC) directors can enjoy. For example, by making a small contribution to an unemployed insurance one can, in case of need, receive unemployment benefits.
There are several ways that a contractor can work in France, some of which are more attractive than others. In this regard, we offer the most attractive solutions for our clients’, namely self-employment and contracting via a PSC. It is also possible for a contractor to work in France under ‘portage salarial’, whereby a contractor is treated as an employee of the portage company and receives all the associated social security benefits in France.
Payroll in France is involved, with an employment landscape that is very protective of the workforce and inflexible. Taxes themselves are not unduly high, but they are complicated to the extent that a French tax return is probably one of the most complex on Earth. What are notoriously high are the social security charges (Charges Sociales) also as seen in the table below.
Personal income tax rates for residents
Official residents pay French taxes on worldwide income, which includes earnings from employment, investments, dividends, bank interest, pensions, and property. The income tax rates in France in 2020 are as follows:
- Up to €10,064: 0%
- €10,064–€25,659: 11%
- €25,659–€73,369: 30%
- €73,369–€157,806: 41%
- €157,806+: 45%
Personal income tax rates for non-residents
Non-residents usually pay tax on their France-sourced income at a minimum French tax rate of 20% for French-sourced income up to €27,519 and 30% for income above this threshold. Property tax in France for non-residents on the taxable gain of the sale of a French property is 19% for EU citizens and 36.2% for all others.
Employees and social security in France
Most employees are covered for sickness, maternity, paternity and family benefits under the compulsory general scheme. This is financed mainly by contributions and taxes deducted from earnings, shared between employees and employers and managed by a network of local, regional and national organisations under the control of various ministries. The general scheme basic pension is also supplemented by other pension schemes. All wage earners are also covered by an unemployment scheme that is managed by employers and representatives of employees. If you are an employee, your employer will arrange for you to join the social security, unemployment and supplementary pension schemes.
Self-employed workers and social security in France
Self-employed workers are covered by a compulsory basic and supplementary scheme for health, family allowances and pensions but not unemployment or sick pay – you need to take out separate cover for that. Most self-employed social security contributions are tax-deductible.
If you are self-employed, you must register for social security with the Union de Recouvrement des Cotisations de Sécurité Sociale et d’Allocations Familiales or URSSAF. URSSAF will automatically enrol you with the various funds that in turn will send you bills for your contributions.
Specialised insurers provide health insurance through the Regime Social des Independents (RSI).
You can contribute to retirement and invalidity funds through the Caisse National d’Assurance Vieillesse des Professions Libérales or CNAVPL.
Social Security Rates
& Monthly ceiling
|Health, maternity, disability, death1||–||13% or 7%|
|Autonomy solidarity contribution (“Contribution solidarité autonomie”/ CSA)||–||0.3%|
|Old-age insurance (with upper limit)2||6.9%|
|Accidents at work3||–||variable|
|Family benefits4||–||5.25% or 3.45%|
|Social security surcharge (“Contribution sociale généralisée” / CSG)5||9.2%|
98.25% of gross salary
|Social security debt reimbursement contribution|
(“Contribution pour le remboursement de la dette sociale”/ CRDS)5
98.25% of gross salary
|Supplementary pensions (Agirc-Arrco scheme) 7|
|– Bracket 1||3.15%|
|CEG (Overall balance contribution)||0.86%|
|– Bracket 2||8.64%|
to 27,424 €
to 27,424 €
to 27,424 €
to 27,424 €
- The Social Security financing law for 2018 has instituted a 7% employer’s health-maternity-disability-death contribution as from January 1st, 2019, on yearly salaries not exceeding 2.5 times the French minimum wage.
- Monthly social security ceiling in 2020.
- This rate varies based on company size and risks.
- The rate of 3.45% applies to businesses eligible for the general decrease in contributions and to annual salaries lower than or equal to 3.5 times the legal minimum wage (SMIC).
- The 2018 social security financing law increased CSG withholdings by 1.7 points on earned income (increase from 7.5 to 9.2%) and on retirement and disability pensions. With regard to these pensions, French Law No. 2018-1213 of December 24, 2018, instituting economic and social emergency measures, set a new, intermediate rate, bringing the number of different applicable rates as determined by an individual’s reference taxable income for the year N-2 to 4. Persons who are members of the French social security scheme but not residents of France for tax purposes are not liable to CSG and CRDS. They are however liable for employee’s health insurance contributions at a rate of 5.5% on total earnings. CSG and CRDS are also deducted at rates of 6.2% and 0.5% respectively from replacement income (Daily compensation benefits, unemployment benefits, etc.)
- The upper limit is equal to 4 monthly social security ceilings (4 x 3,428 €).
AGS: wage guarantee insurance association. It is entirely employer-funded and finances the wage guarantee scheme: if a company goes into a receivership or court-ordered liquidation, it guarantees the payment of employees’ wages, notice period, and compensation.
- The Agirc and Arrco schemes merged on January 1st, 2019. Compulsory supplementary retirement pension contributions are now calculated based on two brackets for both executive (“cadre”) and non-executive salaried workers:
- The 1st bracket comprises from the first euro to the amount of the Social security ceiling,
- The 2nd bracket comprises from the amount of the Social security ceiling to 8 times the Social security ceiling.
The contribution adjustment factor (127%) generates excess contributions without increasing retirement pension entitlements. Points are calculated using the contractual rate. For bracket 1, which has an overall rate of 7.87%, only 6.20% is taken into account to calculate an employee’s retirement pension points. The rest goes to finance the scheme. The following are added on to the aforementioned contributions:
- The APEC contribution, which only applies to executive employees (those with “cadre” status), on the portion of their salary amounting to 4 times the social security ceiling. The overall rate of this contribution is 0.06%.
- The CET (technical balancing contribution), which applies to both executive and non-executive employees whose salaries are above the monthly social security ceiling (the employee’s share is 0.14% and the employer’s share is 0.21%).
Corporate Income Tax
For financial years starting on or after January 1st 2020, a 28% CIT rate will apply on the first €500,000 of taxable income. Taxable income exceeding €500,000 will be subject to a 31% CIT rate (instead of a 28% CIT rate).
TVA (Taxe sur la Valeur Ajoutée) is an expenditure tax imposed on consumers of goods and services.
Companies act as huge tax collectors for the French Government, not least in the collection of TVA, which generates more revenue than any other tax.
TVA is payable on almost all commercial goods and services, with few exceptions.
The main rate of TVA in France is 20%, but there is a reduced rate of 5.5% for food, travel, some domestic personal services and most entertainment events.
The TVA turnover threshold for 2019 is €33,200 for a service-based business and €82,800 for commercial activities, bars and restaurants and those who let furnished accommodation.
If you reach these levels of turnover, you are obliged to charge TVA, although where these limits are only marginally exceeded by up to a few thousand euros (€35,000 and €91,000 in 2019), TVA need not be imposed for two years, including the year in which the limit was exceeded. This flexibility does not apply in the first year.
Impatriate Tax Regime
The expatriate tax regime applies to individuals who were not residents of France for tax purposes during the five calendar years before their taking up their duties in a company based in France which recruits them:
- either the employee is “recruited by a company” that has links with the original company based abroad [intra-group] transfer. These links may relate to share capital, or be legal or commercial in origin This applies, among other things, to employees who are posted or made available as part of an intra-group transfer, for instance, from a foreign parent company to a subsidiary based in France ;
- or the employee is directly recruited abroad for a position in a company in France [external hire].
Persons coming to work in France at their initiative or who have already established their residence in France at the time of recruitment are not eligible for the expatriate regime.
The expatriate regime provides entitlement to various income tax exemptions.
- contains an administrative assistance clause to combat tax evasion and avoidance) ;
- 50 % of capital gains on the sale of securities and ownership interests from foreign sources.
The employee shall be taxed in France on an amount at least equivalent to the compensation earned in the same company by a non-expatriate employee.
In practice, the expatriate’s taxable income must, after exemption of the expatriate bonus, remain at least equal to the reference compensation, which corresponds to the amount paid for similar functions within the company or, where applicable, within similar companies based in France.
The expatriate bonus may, therefore, be determined as a percentage of the base compensation which itself includes a variable portion, or as a percentage of the variable portion of the compensation alone. As an example, the bonus may be set at:
- 30% of the fixed compensation; at
- 30% of the base compensation (that itself includes a variable portion) or at
- 30% of the variable portion of the compensation alone.
Glossary of Terms
The National Institute of Statistics and Economic Studie (Institut national de la statistique et des études économiques), or INSEE French is the national statistics bureau of France. It collects and publishes information about the French economy and people and carries out the periodic national census.
EU, EEA, and Swiss nationals who are moving to France to live, work, and study, will not need a French visa or permit. They won’t need to show any other documentation besides a valid passport or national ID with no need for additional work permits). There are, however, some other processes that may apply after you move to France.
Family members of EU/EEA/Swiss citizens can also live in France, even if such family members are not from the EU themselves. They will, however, require the appropriate permit for more extended stays in France.
There is no need to register your business separately in France for TVA/VAT. When you receive your commercial registration number, the ‘SIRET’ (Système d’Identification du Répertoire des Entreprises), this becomes your TVA/VAT number.
A SIREN number is your unique French business identification number. This nine-digit number will be requested by all French administration when dealing with you, e.g. URSSAF, RSI, Impot, etc. It is proof that you are a fully registered French business, listed on the national business directory – répertoire national des entreprises. Your SIREN number will be issued by INSEE (national institute of statistics) when you register your business.
Your SIRET number will be issued once you have registered your business with the Chambre de Commerce (RCS) for trade, Chambre de Metiers for crafts and manual work or with URSSAF for intellectual services such as IT consultant. You will receive an Extrait KBIS usually within two weeks of your registration with your SIRET number. For auto-entrepreneurs, your SIRET number will be on the letter sent to you by INSEE.
The difference between a SIREN number and a SIRET number A SIRET is a fourteen digit number referring to your business location (SIREN + 5 digits).
The French URSSAF (Unions de Recouvrement des Cotisations de Sécurité Sociale et d’Allocations Familiales – the Organisations for the Collection of Social Security and Family Benefit Contributions) is a network of private organisations that collect employee and employer social security contributions. The contributions finance the Régime General (general account) of France’s social security system, including state health insurance (Assurance Maladie en France [fr]).
Up until late 2017, France’s Social Security system had a separate scheme for self-employed workers not involved in agriculture. The Social Security Financing Law for 2018 eliminated the Régime Social des Indépendants (RSI), and the General Scheme provides these workers’ compulsory Social Security coverage. There are specific provisions which apply to self-employed workers.
For full information on SSI please visit: https://www.cleiss.fr/docs/regimes/regime_france_independants_en.html