Last Updated June 2023
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France, officially known as the French Republic, is a country located in Western Europe. It shares its borders with several countries, including Belgium, Luxembourg, Germany, Switzerland, Italy, Spain, Andorra, and Monaco. France is known for its rich history, culture, art, cuisine, and fashion.
Payroll in France – 2023 Updates
France has recently released the following payroll updates:
Covid sick leave
Employees with Covid-19 will receive daily allowances and salary maintenance from their employer until 31th December 2023 at the latest, under special conditions. The sick leave is recorded by the health insurance company after a declaration made through an online service.
Lump-sum deduction of employers’ contributions
The lump-sum deduction of employer’s contributions may be deducted from the contributions.
This change applies retroactively to contributions due for periods since 01/10/2022.
Monetization of TOIL days (social regime)
The employee may waive all or part of the days or half-days of rest acquired in respect of periods after 1st January 2022 and until 31st December 2025.
Apprenticeship and professional contracts
The payment of “exceptional” financial aid for the hiring of apprentices and employees on professionalization contracts has been renewed for 2023, with a new amount.
Apprenticeship contracts and professionalization contracts concluded between 1st January and 31st December 2023 for the preparation of a diploma or professional qualification of no more than level 7 (master’s degree, engineer, etc.) are entitled to exceptional aid, paid for the first year of performance of the contract, amounting to €6,000.
Provision of an electric vehicle
The favorable system relating to the evaluation of the benefits in kind linked to the provision of an electric vehicle by the employer is extended until 31/12/2024.
The evaluation of the benefit in kind for the basis of social security contributions does not consider, for the years 2023 and 2024, the electricity costs incurred by the employer for recharging the vehicle. In addition, the expenses will continue to be assessed after application of a 50% deduction up to a limit of €1,800 per year.
When the charging point is installed at the workplace, the benefit in kind resulting from the use of this charging point by the employee for non-professional purposes is assessed at a zero amount, including for electricity costs.
Telework and NICT
The exemption limits for lump-sum telework or new information and communication technologies (NICT) allowances are now revalued each year on 1 January:
- for telework, to €10.40 per month for a weekly telework day or €2.60 per telework day, up to a maximum of €57.20 per month (compared to €10 per month for a weekly telework day or €2.50 per telework day, up to a maximum of €55 per month in 2022);
- for expenses incurred for the use of NICT tools, €52.20 per month if justified by a professional reason (compared to €50 per month in 2022).
Company Savings Plan
Renewal for 2023 of the temporary exemption from the social security tax on employer contributions supplementing a voluntary payment into the Company Savings Plan (PEE – Plan d’Epargne Entreprise in French) intended for the purchase of shares or investment certificates of the company or of a company in the group.
SMIC
The hourly minimum wage has been set at €11.27 on 01/01/2023.
France Payroll – Basic Facts
Income in France is subject to three main levy types, income tax, social security contributions and social levies. Optional levies for employees include pension contributions, mutual insurance contributions, and life insurance.
The French tax year is equal to the calendar year. Filing dates for the annual income tax return, for both residents and non-residents, can be found here.
Tax and Social Security Considerations
Personal income tax rates for 2022
Taxable income |
Tax rate |
Up to €10,084 |
0% |
From €10,084 to €25,710 |
11% |
From €25,710 to €73,516 |
30% |
From €73,516 to €158,122 |
41% |
Over €158,122 |
45% |
Corporate Income Tax
The general company tax rate is 25%. As from 1 January 2023, the reduced CIT rate of 15% applies for small corporations on their first EUR 42,500 of taxable profits.
Income Tax
Calculation of employee tax is generally based on the total income of the household rather than calculated individually. The total income is divided by the number of parts before applying the rates below. The resulting figure is then multiplied by the number of parts to give the total tax due. Each child counts as half a part. The tax advantage obtained for each child is limited to 1,678 Euros (known as plafonnement).
Personal income tax rates for 2023
Taxable income Тax rate
Up to €10,777 0%
€10,777 to €27,478 11%
€€27,478 to €78,570 30%
€78,570 to €168,994 41%
Over €168,994 45%
Income tax deductions and allowances
General deduction of 10% of monthly salary. The deduction is capped at 13,522 Euros. Contributions into pension schemes are subject to an upper limit.
Social Tax
The Social Security Rate in France stands at 68%. The Social Security rate for companies is 45% and for employees – 23%. Learn more about the French Social Security System and rates here.
General Social Contribution (Contribution Sociale Généralisée, CSG)
The CSG is a tax imposed on income, including wages and other sources of income. It helps finance social security programs and other social benefits. The CSG is typically deducted from employees' gross wages.
Tax Deductions
In France, there are various tax deductions and credits available to individuals and businesses. Here are some common tax deductions in France:
- Work-related Expenses: Employees can deduct certain work-related expenses, such as transportation costs, meal expenses during business travel, professional training expenses, and union dues.
- Home Loan Interest: If you have a mortgage or home loan, you may be eligible to deduct the interest paid on the loan from your taxable income. This deduction is applicable for the purchase or construction of the main residence.
- Childcare Expenses: Parents can benefit from tax deductions for childcare expenses. The amount that can be deducted depends on the age of the child and the type of childcare chosen (nursery, childminder, etc.).
- Pension Contributions: Contributions made to certain pension plans and retirement savings schemes can be deducted from taxable income. The amount that can be deducted varies depending on the type of plan and individual circumstances.
- Donations to Charitable Organizations: Donations made to recognized charitable organizations can be tax-deductible in France. The deduction amount varies based on the type of donation and the organization's status.
- Energy Efficiency and Renewable Energy Investments: Tax deductions or credits may be available for individuals or businesses investing in energy-efficient equipment, renewable energy installations, or home renovations that improve energy efficiency.
- Rental Property Expenses: Landlords can deduct certain expenses related to rental properties, such as property taxes, insurance premiums, maintenance and repair costs, and management fees.
- Professional Expenses for Self-Employed Individuals: Self-employed individuals can deduct various expenses related to their business activities, including office rent, equipment, professional fees, and travel expenses.
- Healthcare Expenses: Certain healthcare expenses, such as medical consultations, prescription drugs, and hospitalization costs, may be eligible for tax deductions. However, these deductions are subject to certain limits and conditions.
VAT
The standard rate applying to the supply of goods and services is 20%. There are reduced rates of 5.5% or 10% which applies to certain goods and services like food products, gas and electricity, passenger transport, hotel, pensions, and others. There is also a special rate of 2.1%, which applies to a limited scope of goods and services.
Other Taxes
- Capital gains on securities – at a flat rate of 30% and, if applicable, to the exceptional income tax for high earners at a maximum marginal tax rate of 4%.
- Capital gains tax on real estate properties – various regimes apply
- Exit tax – individuals who transfer their tax domicile outside of France are taxed on the unrealized capital gains on shares and rights held directly by tax household members when these rights either exceed 505 of the shareholding or represent a total value exceeding 800,000 Euros. These capital gains or value of receivables will be subject to the PIT at a flat rate of 12.8% and social surtaxes of 17.2%.
- Wealth tax– a wealth tax return need only be filed if the taxpayer has net assets of more than 1.3 million Euros.
Compensation and Benefits
Minimum Wage
On May 1, 2023, the French minimum wage increased by 2.22 %. The minimum hourly gross wage is now at €11.52, representing a monthly wage of €1,747.20 on a weekly basis of 35 hours.
Working hours
Legal working hours for full-time employees in France is 35 hours per week and can be annualized to 1607 hours or 218 days. A working day may not exceed 10 hours unless considered under a collective agreement.
The hours noted apply to all employees with the exception of those with special working conditions such as sales reps, executives, LLC company managers, caretakers and domestic staff. Staff in the areas of exception, generally, work approximately 40 hours per week with a maximum allowance of 46 hours.
Working hours
Any hours worked beyond the standard 35 hours per week are considered overtime. Overtime hours are subject to different rules and may entail additional benefits for employees.
Overtime work in France generally entitles employees to additional compensation. The exact compensation depends on various factors, such as the employee's collective bargaining agreement, the number of overtime hours worked, and the timing of the work (e.g., weekdays, weekends, or public holidays).
Overtime hours are typically paid at a higher rate than regular hours. The exact rate of overtime pay depends on the applicable collective bargaining agreement or employment contract. It is common for overtime pay to be 25% to 50% higher than regular pay.
Holiday leave
Employees are entitled to two and a half working days per calendar month worked, totaling 5 weeks paid annual leave.
Parental leave in France is regulated by the French law and provides parents with the opportunity to take time off work to care for their children.
Maternity leave for a French employee is fixed at 16 weeks. This includes 6 weeks leave prior to the birth and 10 weeks leave after the birth of the child.
Paternity leave is fixed at 11 consecutive calendar days and in the case of multiple births, extends to 18 days in total.
Holiday leave
In France, employees are entitled to sick leave, also known as "congé de maladie" or "arrêt de travail," which allows them to take time off work when they are unable to work due to illness or injury.
A medical certificate (certificat médical) from a healthcare professional is required for sick leave. The employee should provide the medical certificate to their employer within 48 hours of its issuance.
The duration of sick leave can vary depending on the employee's condition. In general, for sick leave of up to three days, no specific formalities are required apart from notifying the employer. Beyond three days, a medical certificate is necessary, and sick leave can be extended.
During sick leave, employees may be entitled to receive sick pay (indemnités journalières) from the French social security system. The sick pay is calculated based on the employee's average daily wage. The amount and duration of sick pay can vary depending on factors such as the length of employment and the employee's contributions to social security.
Some employers provide additional benefits beyond statutory sick pay. These additional benefits may include a supplementary payment to compensate for any wage loss during the sick leave period. The specifics of employer complements vary depending on the employment contract and any applicable collective bargaining agreements.
Before returning to work after a period of sick leave, employees may need to undergo a medical examination by an occupational health professional (médecine du travail). The examination aims to assess the employee's fitness to resume work and determine if any work adjustments or accommodations are necessary.
Severance pay
Severance pay, also known as "indemnité de départ" or "indemnité de licenciement" in France, is typically associated with redundancies or terminations initiated by the employer, such as layoffs or dismissals due to economic reasons. The amount of severance pay is calculated based on the employee's length of service and monthly salary. The formula for calculating severance pay takes into account the number of years of service and a specified percentage of the average monthly salary earned during the last 12 months.
In addition to severance pay, employees may be entitled to other unemployment benefits, such as any unused vacation pay, outstanding bonuses, or other contractual entitlements. These additional benefits may vary depending on the employment contract and any applicable collective bargaining agreements.
Public Holidays
France observes several public holidays throughout the year. These holidays, known as "jours fériés," are official non-working days when most businesses, schools, and government offices are closed. Here are the major public holidays celebrated in France:
- New Year's Day (Jour de l'An) - January 1st
- Celebrates the beginning of the Gregorian calendar year.
- Easter Monday (Lundi de Pâques) - the day following Easter Sunday
- Marks the resurrection of Jesus Christ after his crucifixion.
- Labor Day (Fête du Travail) - May 1st
- Honors workers' rights and achievements. It is a day of demonstrations and celebrations by labor unions.
- Victory in Europe Day (Fête de la Victoire 1945) - May 8th
- Commemorates the victory of the Allies over Nazi Germany and the end of World War II in Europe.
- Ascension Day (Jeudi de l'Ascension) - 40 days after Easter
- Celebrates the ascension of Jesus Christ into heaven.
- Whit Monday (Lundi de Pentecôte) - the day following Pentecost Sunday
- Commemorates the descent of the Holy Spirit upon the disciples of Jesus Christ.
- Bastille Day (Fête Nationale or le 14 juillet) - July 14th
- Celebrates the French Revolution and the storming of the Bastille prison in 1789, symbolizing the beginning of the modern French nation.
- Assumption Day (Assomption) - August 15th
- Honors the Virgin Mary's assumption into heaven.
- All Saints' Day (La Toussaint) - November 1st
- Commemorates all the saints and departed loved ones.
- Armistice Day (Jour de l'Armistice) - November 11th
- Marks the armistice signed between the Allies and Germany, ending World War I.
Additionally, some holidays may vary by region or have specific local observances. For example, Easter Monday and Whit Monday are public holidays throughout France, but there may be other regional holidays celebrated in specific areas.
Foreign Workers in France
France is considered one of the most heavily protected labour markets in Europe, however, in recent years this has changed due to professional shortages, particularly in the IT sectors.
Immigration law dictates, in the majority of cases, that work permits can only be applied for by the employer of record. The application must usually be made by an established French company who have signed a direct employment contract with the potential candidate.
With the exception of Croatia, European Economic Area (EEA) nationals do not need a permit to live and work in France. Croatian nationals need to obtain a French work permit for their first year in living and working in the country.
It is necessary for non-EEA nationals to apply for a work permit to work in France. The individual permit options that can be obtained, include:
- Skills and Talents Permit– Aimed at individuals with the skills and expertise to make a significant contribution to the French economy. This permit includes those with scientific, artistic and sporting talent.
- Scientific Permit– Allows individuals holding a Masters degree or higher to enter France to carry out research and complete other academic work.
- Salaried Work Permit– Allows employees who are employed directly by a French company on a basis of more than 12 months to live and work in France. This permit is restricted to a limited number of varying professions.
- Temporary Work Permit– As with the salaried work permit, employees who are employed directly by a French company and have a specific profession can be granted this permit. This permit is for employees with a contract lasting less than 12 months.
- Employee on Assignment Permit– This permit is for international business who wish to transfer employees to their offices in France. The employee in receipt of the permit must be employed with the business for at least 3 months and must be paid 150% of the French minimum wage.
- Employee on Assignment Card– Allows high-level employees within an international business to live and work in France.
- Seasonal Worker Permit–Allows businesses within France to employ foreign applicants to work within the country for a maximum of 6 months within a 12-month period.
Non-residents are subject to income tax on their French-source income only, subject to the provisions of the relevant tax treaty. Individuals will be considered resident in France if they have their permanent home in France.
For more information about how our Global Payroll Control Platform integrates with local payroll providers in France, contact us today.