Tax Figures
Corporate Income Tax
A company that is incorporated in France is deemed to be tax resident. A foreign company could be French resident if it is controlled and managed in the country.
The standard corporate income tax rate is 33,33%. Small or new businesses may be subject to lower rates. A 3.3% social surcharge applies to the mentioned rate when tax liability exceeds €763,000.
The tax year is generally corresponds with the calendar year (there is a possibility to choose a different year-end date). A self-assessment regime applies to companies operating in France. Corporate tax returns are normally have to be lodged by 30th of April of the year following the calendar year (or within three months of the year end for a non-calendar financial year). There is a 10% penalty for late payments and late filing. Special penalties can apply in the case of bad faith or abuse of law.
Income Tax Rate
- €0 – €9,690: 0%
- €9,690 – €26,764: 14%
- €26,764 – €71,754: 30%
- €71,754 – €151,956: 41%
- Over €151,956: 45%
An extra contribution applies to income that exceeds €250,000 for single individuals and €500,000 for married couples. This contribution is extra 3% on income between €250,000 and €500,000 for single individuals (€500,000 – €1,000,000 for married couples) and 4% for income exceeding €500,000 for single individuals (€1,000,000 for married couples).
Payroll Tax
Payroll tax is levied on entities that collect revenue not subject to VAT. This mostly applies to banks and financial institutions.
The rates:
- 4.25% on individual salaries up to €7,705;
- 8.5% on the portion of the salary in €7,705 -€15,385 bracket;
- 13.6% in €15,385 – €151,965 bracket;
- 20% on the excess over €151,965.
Sales Tax
Value Added Tax (VAT) is imposed on the sale of goods and the provision of services.
The standard VAT rate is 20%. Reduced rates of 5.5% or 10% apply to most food products and some other items. There is also a preferential rate of 2.1%, which is payable on some periodicals and medicines reimbursed by the social security system. Certain transactions could be exempt from VAT.
Withholding Tax
There is a 30% withholding tax on dividends that are paid to a nonresident shareholder by a French corporation, unless some treaty rules apply.
Interest paid to a nonresident lender by a French company is generally not subject to withholding tax.
A 33,33% withholding tax is imposed on royalties paid to a nonresident entity by a French company. Fees paid for commissions, consultancy and services performed or consumed in France are also subject to this rate. The rate may be reduced or eliminated under a tax treaty or under a EU interest and royalties directive.
Other Tax
Resident and nonresident companies operating in French must pay the CET (“contribution economique territoriale”). The CET consists of a real property tax and a tax calculated on adjusted gross receipts of the French business.
The sale of real property is subject to a transfer tax at a maximum rate of 5.8%. The sale of shares of a limited liability company (SARL) or commercial partnership (SNC) is subject to a transfer tax equal to 3% of the sale price, minus a sum equal to the number of units sold x EUR 23,000/total number of the company units.
A number of minor taxes also apply to corporations in France to fund specific social purposes.
Time to prepare and Pay Taxes
139 hours
Employers Social Security and statutory contributions
France’s mandatory national social insurance system covers health (maternity, disability and death), family allowances, retirement, housing benefits, and occupational accidents (including illness).
Social security contributions that are payable by the employer could vary depending on the type, size and location of the business, and generally amount to approximately 50% of gross pay.
Employees Social Security and statutory contributions
The employee also must pay social security contributions and surcharges, which are deducted at source from their salary payments. Their contributions amount to approximately 20% of salary.
Payroll
There are specific rules for payroll and taxation in France, depending upon the type of business structure used. The primary concerns for a foreign company that needs to comply with tax laws in France are individual income tax for employees, social security costs, health insurance contributions, payroll tax, sales tax, withholding tax, business tax and permanent establishment concerns.
Remote Payroll
A remote payroll in France is where a foreign company, i.e. a non-resident company, payrolls a resident employee in France. Under French law only incorporated entities are allowed to have employees based in France. This applies to both local and foreign employees. One option for a non-resident company to payroll its employees (local and foreign) in France is to use a fully outsourced service like a GEO or FESCO which will employ and payroll the staff on their behalf.
Local Payroll Administration
In some cases, a company will register their business in France under one of the forms available, but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.
Internal Payroll
Larger companies with a commitment to France may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a French payroll, and can fulfill all tax, withholding, and payroll requirements.
This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with French employment laws.
Setting up payroll in France
Currency
Euro (EUR)
Employee Information Required
The following information are needed:
- Full Name (Title, First, Middle, Last)
- Address/ Postal address
- Telephone number
- INSEE code (National identification number/ Social security number)
- Any pension details (if applicable)
- Any disabilities that’s relevant to work
- Various businesses may require further details
Tax Registration Requirements
Employees are required to maintain their own taxes and file a tax return each year.
Social Security Registration
Employees are required to register for social security. When employing staff, employers are required to register themselves with the URSSAF (Unions de Recouvrement des Cotisations de Sécurité Sociale et d’Allocations Familiales, meaning the Organizations for the payment of social security and family benefit contributions). Employers will have to make contributions towards their employees social security
Documentation Required for New Employees
New employees must be provided with an employment contract which is a written statement of all the terms included in the agreement of the job role. A French employment contract must include the following:
- Employee’s job title and professional qualification
- Salary and bonus
- Convention Collective, relative to the employment (an agreement between employers’ associations and
- trades unions regarding work conditions and agreements)
- Notice period in case of resignation
- Place of work
- Duration of the contract
- Trial period
- Notice period
Some contracts may also include either a Clause de mobilite or a clause de non-concurrence. A Clause de mobilite states that an employee agrees to accept any future job transfers which may be requested. If the employee does not agree then it may result in the employees contact being terminated. A Clause de nonconcurrence states that an employee will not work for either a fellow competitor or an other company in the same sector for a set period of time after the termination of the employment contract.
Payment Mode
Small, independent business owners may feel that they want to pay their employees by using cash or a cheque. However large companies with a large quantity of employees will find the method of Electronic Payment much easier and quicker to work with.
Frequency of Salary Payment
Most employers choose to pay their employee’s once a month, as a salary. However other frequencies include:
- Daily
- Weekly
- Bi-weekly
- Quarterly
- Annual
Invoice / Payslips required
Yes, employees are required to receive an itemised payslip from their employers. The payslip must include the employee’s gross salary, net salary, social security contributions, complementary pensions, unemployment insurance.
Minimum Wage
1,445.38 Euros per month (2014).
