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Payroll and Tax France

For companies looking to expand to a new market, France offers tremendous opportunities thanks to its status as the second biggest economy and exporter in the European Union.

The rules regarding payroll differ from country to country and France is no exception. When operating payroll in France, it’s important to be familiar with the country’s regulations as the risk of non-compliance is high and could have a costly effect on your business. In this guide, we explain everything you need to know about payroll in France.

Understanding Payroll in France

Payroll in France is typically processed on a monthly cycle. While there is no fixed date when salaries must be paid, it is common to pay employees at the end of the month. It is also possible to have a pay date outlined in a collective labor contract if it differs from the end of the month.

Withholding Taxes in France

Under its previous system, France was one of the few countries to not operate a tax withholding system on income received from employment meaning that employees would have to file income tax returns at the end of the fiscal year. However, this system was replaced in January 2019 by a withholding tax “PAS” (“prélèvement à la source”) and covers a wide variety of incomes including pensions, self-employment income and property income.

Under the PAS system, income tax is paid in the same year as it is earned and employers collect tax on the monthly income on behalf of their employees, based on the tax rate communicated by the tax authorities. As a result of this responsibility placed on the employer, they are liable for any errors that occur (such as missed payments or under withholding). It is thus vital that businesses running payroll remain up to date with the requirements and any regulatory changes. Every month, the employee can view how much tax has been withheld on their payslip.

Personal Income Tax (PIT) in France

Income rates in France depend on marital status, whether you have children, if so, how many, as well as how much you earn before tax. The 2021 individual income tax rates in France are as follows:

Income bracket (€) Tax rate applied
Up to €10,048 0%
€10,085–€25,710 11%
€25,711–€73,516 30%
€73,517–€158,222 41%
Over €158,223 45%

 

Social Security in France

The French social security system protects people from life risks and comprises of four branches: health insurance, retirement pension, occupational risks and family benefits. Both employees and employers must make contributions into the social security system. As of 2021, these contributions include:

  • Health Insurance – No contribution for employees; 7% or 13% for employers depending on the employee’s income
  • Old age insurance – 6.9% for employees; 8.55% for employers
  • Unemployment – No contribution for employees; 4.05% for employers
  • Work accident insurance – No contribution for employees, contribution by employer is variable depending on employee’s income
  • Family benefits – No contribution for employees; 3.45% or 5.25% for employer depending on employee’s income.

If you hire an employee working in France for the first time, you must register the employee for membership with the social security system before they start work, by submitting a Declaration Prior to Hiring (DPAE).

Our French Payroll solution

Based on our longstanding reputation in the global HR field, INS Global is able to offer customized support for your employees working in France. Our service includes:

  • Management of employees – On a monthly basis, we process your employees’ payroll generating payslips for your employees.
  • Administrative and legal formalities – Our highly experienced team are familiar with the French legislative landscape and take care of processes unfamiliar to businesses entering the market for the first time. This including registering your employees for social security and making accurate payments on time and on your behalf.
  • Payroll portal – As an INS Global client, you’ll have access to our payroll platform which allows you to submit your employee’s information (sick days, annual leave, bonuses, etc.) to your payroll manager to be processed on our end.
  • Consulting on HR matters – As a leading Global PEO and HR consultant, our team is able to offer consulting when it comes to drafting labor contracts, ensuring they are in line with French labor law.

INS Global: Your Payroll Outsourcing partner in France

If you’re looking to expand to France and outsource your payroll, then look no further. With our team’s expertise, INS Global can make your expansion as seamless and hassle-free as possible. To learn more about our payroll service, speak to our advisors today. We’ll get back to you quickly.

 

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