French Social Security
This page outlines
- Taxable income
- Social Security rates
- International aspects
- Social Security Optimisation
Each household's circumstances are different, and the legislation is complex. We strongly recommend obtaining advice from qualified professionals in France.
French Social Security contributions enable residents to obtain generous benefits such as access to one of the world's best medical systems and some of the world's highest unemployment allowances. Understandably, this requires some of the world's highest contributions...
The contributions also count towards state pensions though no-one knows exactly how much benefit will be obtained when they retire. The French government is strongly encouraging people to organise their own private pensions and we advise working individuals to take maximum advantage of government incentives.
Any residents who are not covered by either the French or another EU scheme can normally pay voluntary contributions (to a system known as protection universelle maladie) to get access to the French medical system.
Social Security contributions are payable on all earned income whether from salaried employment, directorships, partnerships, self-employment, etc.
If you set up a company it is no longer possible to reduce your social charges by paying yourself a small salary and taking the remainder as dividends.
Since 2013, full social security contributions are due on most dividends as well as on salary (for individuals who pay themselves a mixture of both).
SOCIAL SECURITY RATES
The calculations for contributions are extremely complex being made up of a large number of elements. For the self-employed, the contributions are calculated based on income from the year before last.
Salaried employees are typically subject to employer contributions of around 45% and employee contributions of around 25%
Self-employed are typically subject to contributions of around 30%. This excludes any rights to unemployment benefits. Please note the rate is not fixed: it can reach around 40% for low incomes and drop to around 15% for high incomes.
If you expect income to be below 170000k€ (commercial activities and unfurnished rentals) or 70000€ (service activities, arts & crafts, furnished rentals) you should strongly consider using the Micro Entreprise (previously called AutoEntrepreneur) regime. Full details can be found at the official website www.autoentrepreneur.urssaf.fr .
There is a specific treaty covering social security contributions and benefits for all EU citizens. The objective is that citizens will pay contributions in only one country at a time - but can move around the EU obtaining benefits wherever they are.
In addition, the treaty clarifies the rules for secondments (being sent by your employer for one or two years to a different country) and frontier workers (working in one country and living in another).
For non-EU citizens living in France, similar treaties exist to prevent dual payment of contributions while ensuring a minimum level of permanent social cover.
Citizens who depend entirely upon the social system of another EU country may be eligible for reimbursement of certain parts of the social contributions - see restitution des prélèvements sociaux in our section on Social Taxes.
OPTIMISATION : HOW TO REDUCE SOCIAL SECURITY
1. Structures in France.
Given the difference in contribution rates between salaried and self-employed workers, you should carefully weigh up the alternatives if you intend to create a small business yourself in France.
There are a number of structures available in France - and you must take the varying legal consequences into account (such as limited liability) as well as the differing costs of social security contributions.
2. International workers
If you spend a significant amount of time in another country, it may be worth reviewing the possibility of setting up a specific work contract with that country - which would normally be subject to local and not French social security contributions.
Given the difference in rates between France and other EU companies, you should consider the possibility of taking advantage of the international treaties.
EU expats should consider a secondment for one or two years. If your work can be carried out outside France, you may be able to qualify as a frontier worker.
Both solutions can provide greatly reduced levels of contributions - yet ensure continued benefits within France.
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