France Global Payroll & Tax Information Guide

Jan 9, 2018 | Country Payroll Guides

France, officially known as the French Republic, is one of Europe’s largest and most financially powerful nations in the world. According to the World Trade Organisation (WTO) France is the second largest exporting country in Europe and offers access to lucrative markets Worldwide. Key factors such as low set up costs, a culture which values focus, efficiency and diligence, a central European location and investment incentives make France an attractive location for business set up. A range of incentives are offered to both local and foreign businesses planning to make an inward investment in the country, particularly in markets subjected to hardship during the global recession. Foreign Direct Investment (FDI) and incentives for research & development are available to businesses wishing to set up base in France. Detailed below are key points companies should consider when setting up in France from a Global Payroll perspective.  

WHAT’S NEW IN FRENCH PAYROLL 

  • From September 2017, Legal Termination Indemnity increased to 25% of an employee’s average monthly salary for the first 10 years of service.
  • Dividends, interest and capital gains tax have, since the beginning of 2018, been capped at a single flat rate of 30%. This is to encourage a better return on savings and maintenance on savings plans.
  • From 1st January 2018, individuals earning more than €5,000 will be required to file their income tax returns online. This will become a requirement for all taxpayers in 2019.
 

BASIC FACTS ON PAYROLL IN FRANCE 

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. Unlike many countries, the deduction of levies is not the responsibility of employers as currently, a PAYE (Pay As You Earn) system is not in place. This is set to change on the 1st of January 2019. On the current system, employees within France are obliged to deduct levies from their salaries and submit their own tax returns in three or ten installments throughout the tax year. The deadline for which is 31st of May of each year. Calculation of an employee’s tax is generally based on the total income of the household rather than calculated individually.

INCOME TAX RATE CHART 

Tax Band Deduction Percentage
Up to €9,710 0%
From €9,710 to €26,818 14%
From €26,818 to €71,898 30%
From €71,898 to €152,260 41%
Over €152,260 45%

MINIMUM WAGE 

The French national minimum wage in 2018 is fixed at €1,480.27 per month based on a 35-hour week or €17,764 per year, a rise from the previous year at €1,466.62 per month. Employee overtime is calculated as an additional 25% per hour for the first eight hours of overtime. This is extended to 50% per hour thereafter.  

WORKING HOURS 

Legal working hours for employees in France is 35 hours per week and can be annualised 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.  

HOLIDAY LEAVE 

Employees are entitled to two and a half working days per calendar month worked, totalling 5 weeks paid leave per year. 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.  

FOREIGN EMPLOYEES 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 in France dictates, in the majority of cases, that work permits can only be applied for by the employer. 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 Master’s 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.
For more information on payroll in France and Payslip’s international payroll services contact us today 
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