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How to Pay Independent Contractors in France

How to Pay Independent Contractors in France

December 8, 2022

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Key Takeaways

  1. Contractors in France can be classified as either self-employed workers or micro-entrepreneurs.
  2. Independent contractors pay their own income and social security tax.
  3. Misclassification penalties for companies are severe, including a ban from hiring contractors for up to ten years.
Summary

 

Running a business in France or expanding to the French market lets you make the most of the diverse and professional talent available in the country. Hiring independent contractors in France for part-time work or specific projects can be a fast, reliable, and economic way to expand your team without hiring a full-time employee.

However, labor laws concerning these workers are the same as for regular employees. You have to know how to do payroll compliantly for independent contractors. This article walks you through the necessary processes, including a list of payment options in the country.

 

Hiring Independent Contractors in France

 

Unlike regular employees, contractors do not receive a monthly salary. Contractor payments are compensation for their work in the amount agreed upon in the work contract. Contractors receive their payments at an hourly rate, or perhaps weekly or monthly as in an agreement. Companies typically make these payments every pay period as normal.

It is vital to distinguish how you treat your contractors and employees clearly. If you treat contractors like employees, you may be held liable and charged fees for misclassification.

A contractor is not a subordinate. They are independent of your control and operate with their own work tools and within their own work hours. Their responsibilities should be laid out clearly in a contractor work agreement. This should also include payment terms and any necessary information depending on your country of operation. In other countries such as the US this involves W-9 forms.

The penalties for misclassifying a contractor in France are severe. Companies have to make back payments for missing salary and social contributions amounts. In some cases, there may be jail time and a ban from hiring independent contractors for two to ten years.

Additionally, companies in France can only hire a contractor if there’s evidence that the current staff cannot manage alone. This can be limiting for some employers, depending on their needs.

 

Taxes for Contractors and Micro-Entrepreneurs

 

Self-employed workers in France can choose to categorize themselves under one of two categories. These are the standard income tax system for self-employment, or as micro-entrepreneurs.

Micro-entrepreneurs can exempt themselves from business tax in the first year of business.

They may also receive an allowance on income without tax of up to 71%. Social security percentages for micro-entrepreneurs are also lower, and up to 50% relief is available under certain circumstances.

Employers in France do not need to withhold taxes or pay social security contributions for independent contractors. The contractor is expected to file these taxes by themselves.

 

Payroll Options for Contractors in France

 

As a member of the EU, France uses the euro, and contractors will expect to be paid in that currency. Whether your company is physically in France or not, you must ensure that you pay contractors on schedule and in full legal compliance.

France’s employment protection laws are known for being quite stringent, and any carelessness or mistakes can result in costing the company expenses.

There are several different ways to pay an independent contractor in France.

 

Digital Platforms

 

You can use digital platforms like PayPal or digital wallets to transfer money immediately. However, transfer fees and exchange rates will add to your costs. If you want to use traditional and reliable payment methods, checks and money orders are available options, albeit slower and more liable for delay.

 

Local Options

 

If your company has a physical branch in France, using local bank accounts to make bank transfers is another safe and secure method. The high fees that come with wire transfers make it an option best used for monthly or quarterly payments. Starting a business overseas may also not be the most efficient option, as the process for running payroll and ensuring correct employer identification numbers can be more trouble than it’s worth.

 

Outsourcing Services

 

Another method is to use a third-party payroll provider. The provider has systems and strategies that will handle every aspect of the contractor’s contract and payroll in a legally secure manner. The cost of hiring a payroll provider can be quite steep, so it’s important to evaluate how this service can benefit your company.

 

As an employer, you need a secure, fast, and effective solution. This will vary depending on the size of your company, the number of contractors you work with, and location of your company branch.

It is also essential to stay on top of any new developments in local labor laws and apply them correctly to avoid the risk of legal errors.

 

 

pay independent contractors in France

 

Manage Contractor Payroll with INS Global

 

Keeping in line with local regulations around contractor payroll and classification can be complex. You want to ensure a swift, simple hiring process while also complying with labor laws, so you don’t have to waste expenses in paying fees or fines.

So, guaranteeing that your contractors receive payment on time and correctly is essential to smooth business operations. In addition, ensuring you are compliant with tax forms, payroll taxes and employment tax in your target market is the only way to keep you and your employees safe. Operating a company in France safely means paying employees and contractors correctly, which we can help with thanks to expert payroll services and proprietary payroll software.

INS Global gives you the best way to pay contractors at home or abroad. We help you achieve more as we partner with you to expand overseas. Our legal team and counselors provide all the experience and expertise you need to hire new workers confidently and safely.

We have PEO and EOR services in over 80 countries worldwide, and we offer recruitment, payroll processing, and HR services, so your market entry is quick, easy, and obstacle-free.

Contact us here today for more information.

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