At Bradford Jacobs, our Employer of Records (EOR) platform provides reliable solutions for companies wishing to establish their presence in France's economy, which is the seventh largest in the world and third largest in the European Union. From the first steps of setting up operations to ensuring compliance with the local payroll laws and regulations, we offer dedicated France Payroll solutions that can be personalized to your requirements.
We aim to make business expansion easy. At Bradford Jacobs, we navigate the administration of the France payroll system for you, and we also make the returns and associated payments for income tax and social security contributions directly from our payroll system to the local tax authorities.
When expanding into a new country, you may encounter some challenges regarding payroll, but allow us to take the reins and answer any of your questions and concerns with our trusty guide on payroll for France.
What France Payroll Options are available for Companies?
Remote payroll - This option allows businesses to operate under a single payroll system, by adding employees in France to your parent company’s payroll. However, these employees must operate under different regulations, which is likely to cause problems.
Internal payroll - You may operate payroll from your subsidiary, especially if you are committed to growing your company’s presence in France. However, this does require hiring dedicated HR staff that understand the French employment and compliance laws.
France payroll processing company - If you are considering outsourcing, working with a French payroll company will help in processing your payroll – but not when it comes to compliance.
France payroll outsourcing - However, there is another option available which solves both concerns – by working with a company such as Bradford Jacobs. We can handle both your payroll and compliance for all your employees in France. We take the administrative stress off your shoulders so you can focus on what you do best.
France Payroll Services
It is not mandatory for foreign companies to establish a legal entity in France to process payroll. Companies that establish a legal presence to run payroll must follow stringent registration procedures, at the risk of fines, confiscation of property or even deportation and a three-year ban on re-entering France.
Bradford Jacobs’ payroll services provide what you need - ensuring you stay up to date with the rules. We make filings and associated payments for wage tax and social security contributions directly from our payroll system to the relevant authorities. Our role includes:
- Checking that your company name is unique and not already trademarked with the French Patent and Trademark Office, (Institut National de la Propriété Industrielle, INPI) or on their website.
- Liaising with the Center for Administrative Procedures, (Centres de Formalités des Enterprises, CFE), which checks applications, and submits incorporation documents.
- Applying with Form 2043 to the Ministry of Economy and Finance for employees’ individual tax numbers.
- Registering employee with their local tax office (Service des Impôts des Particuliers).
- Registering with the Agence Centrale des Organismes de Sécurité Sociale (ACOSS) so employees are covered by the five funds of the social security system.
- Registering with the Unions de Recouvrement des Cotisations de Sécurité Sociale et d’Allocations Familiales, (URSSAF), which handles social security deductions.
- Drafting valid employee contracts in French, to be legally valid, though translations can be requested.
- Applying for employees’ special expatriation status (if applicable).
- Calculating employees’ monthly salary and sending them their pay slips.
- Researching for any available tax incentives.
- Submitting employees’ or employer’s wage tax returns and social insurance forms.
- Creating and submitting your company’s annual accounts and year-end statements.
- Creating payment schedules for wage tax, national insurance, and net wages.
- Ensuring accurate personal income tax returns for you and your employees.
This ‘to do’ list emphasizes why the popular choice for the majority of foreign companies expanding into France is to hand payroll administration to Employer of Record (EOR) providers such as Bradford Jacobs. Outsourcing company payroll guarantees employees are paid, tax returns are filed, and social security obligations are all met in full and on time – without the risk of fines and sanctions for failure to comply. Bradford Jacobs provides the complete service to remove all the stress and anxiety from your company.
What is required to set up France Payroll?
Requirements for setting up payroll in France depend on how foreign companies establish their presence. Setting up a subsidiary is one option as a first step. However, this takes time and can be a complex process depending on where you incorporate your company as well as the type of entity you choose to establish.
To begin paying payroll in France, you will need to:
- Verify your chosen company name is available with the French Patent and Trademark Office (INPI) and the Commercial Court Registry and apply for the Certificate of Uniqueness
- Submit incorporation application to the Center for Administrative Procedures, (Centres de Formalités des Enterprises, CFE), which then liaises with other relevant authorities and agencies and issues Form M0
- Obtain Certificate of Incorporation, ‘extrait de Kbis’
- Register with the Ministry of Economy and Finance for taxation purposes
- Obtain your employee’s individual tax number by applying with Form 2043 to the Ministry of Economy and Finance
- Register employee with their local tax office, Service des Impôts des Particuliers
- Register with the Agence Centrale des Organismes de Sécurité Sociale, (ACOSS) so employees are covered by the five funds of the social security system,
- Register with the Unions de Recouvrement des Cotisations de Sécurité Sociale et d’Allocations Familiales, (URSSAF), which oversees social security deductions
Companies/employers are not legally required to make payroll payments from an in-country bank account.
What Entitlement / Termination Terms apply to France Payroll?
The French Labor Code guarantees employees various entitlements and benefits under the French Labor Code. Employers must be sure to apply these in employee contracts as well as being aware of any collective bargaining, sector, corporate or trade union agreements. Benefits and entitlements include:
National minimum wage: In 2021 this remained at €1,554.60 (US$1,830) per month or €18,655 (US$21,963) per year.
Working hours: Hours are generally 35 per week and cannot exceed 44 hours on average over 12 weeks to a maximum of 48 hours. The French Labor Code stipulates that any hours over 35 per week, or 1,607 per year, are overtime. Workers are entitled to 20 minutes’ break after six hours work as a minimum – collective agreements can allow for more. Employees must have a minimum of 11 hours unbroken rest between daily shifts, must not work six days in a row and have 35 hours consecutive rest every seven days
Overtime: Based on a working week of 35 hours, the first eight hours earn a premium of 25% on basic hourly rate and 50% extra for each hour exceeding 43. Paid leave is mandatory if employees work more than 220 hours overtime annually in addition to overtime payments.
Paid Annual Leave: The minimum is five weeks after completing one year’s employment, although the Labor Code and collective agreements may allow for more based on length of service. The reference period for annual leave is June 1 to May 31 of the following year, allowing two-and-a-half working days each month to a maximum of 30 days.
Unused leave cannot be carried forward and employees who are sick during vacation cannot claim additional days. A maximum 24 days can be taken in one stretch.
Sick Leave: Employees unable to work through illness or sickness receive a daily benefit from the social security system with their employer legally required to make up the difference as stipulated by the Labor Code. Employees receive 90% of salary for the first 30 days, two-thirds for the next 30 days, with qualifying periods increased by 10 days for each five years or service.
Benefit is paid from day one of incapacity for work-related illness or injury, or from the eighth day in other cases and cannot exceed 90 days in total.
Public Holidays: Labor Day on May 1 is a mandatory holiday and employees who have to work that day receive twice their normal daily pay. Other statutory holidays are.
- New Year’s Day – January 1
- Easter Monday – varies
- World War II Armistice Day – May 8
- Ascension Day – varies
- Pentecost/Whit Monday – varies
- National Day – July 14
- Assumption Day – August 15
- All Saints’ Day – November 1
- World War I Armistice Day – November 11
- Christmas Day – December 25
There is no mandatory right for employees to have extra time off if a public holiday falls on a Saturday, or to have the following Monday off if the holiday falls on a Sunday.
Maternity and Paternity Leave and Benefits: Under the French Labor Code minimum maternity leave totals 16 weeks with at least 10 taken following the birth. Mothers do not have to take the entire leave, but eight weeks is the mandatory minimum. Leave can increase to 26 weeks for a third child, 34 weeks for twins and 46 weeks for triplets. Social security pays a maternity allowance equal to average salary over the three months prior to birth (with a quarterly cap of €10,131, US$11,920) as long as the individual worked a minimum 150 hours over the previous three months.
Since July 2021 paternity leave increased to 28 days, with the salary paid for three days by the employer and by social security for the remainder. Seven days are mandatory. The co-parent has up to six months to take the leave and must have worked at least 150 hours in the three months preceding leave to claim benefits. For multiple births, 32 days leave are allowed.
Termination / Severance /Notice Periods: Statutory severance pay equals a quarter of monthly salary for each year of employment up to 10 years and one third for each subsequent year, if no collective agreement applies or any agreement is less than the statutory minimum.
Notice periods are generally governed by the French Labor Code and collective agreements, the latter particularly applying to fewer than six months’ employment. Notice is one month for between six months and two years’ service and two months for more than two years’ service. However, strict protocols must be followed to dismiss an employee, including precise written justifications for the dismissal, while the employee has the right for union representatives to attend any meetings.
It is common for French employers to pay staff a 13th-month salary as a bonus in December.
What Taxation Rules exist for Payroll in France?
It is vital that employers have a full understanding of the extensive and complex taxation rules that exist for payroll in France, where regulations are among the most demanding in Europe. Employers’ legal obligations include reporting regular and overtime working, relating to salary, tax-exempt elements on the monthly pay slip as well as withholding tax and social security contributions to the authorities.
The French tax year runs from January 1 till December 31 and returns must be filed during May of the following year, according to the exact deadline advised annually by the tax authorities.
Since January 2019, withholding tax (WHT) has applied to a wide variety of income including salaried and self-employed workers, pensions, stock options and rentals. Tax authorities calculate applicable WHT and monthly payments due based on the previous year’s income and this is revised each September. Rates are calculated as an average for the entire household and married couples file joint returns.
- Corporate Tax: The Finance Bill of 2018 charted a steady decrease in Corporate Income Tax (CIT). It is currently down to 26.5% for 2021 and will become a standard rate of 25% for all companies in 2022. Businesses must also make a social contribution, assessed at 3.3% of CIT due, as well as a solidarity contribution of 0.13% of net turnover.
- Income Tax: The tax year runs from January 1 until December 31 with returns due by mid-May. Salaried employees have their due tax withheld by employers for remitting to the tax authorities.
Taxable income starts at €10,085 (US$11,900), with bands at 30% and 41% with a top rate of 45% for taxable income above €158,222 (US$186,660). In addition, those with a taxable income over €250,000 (US$294,000) attract a 3% surcharge on the extra, while those with taxable income above €500,000 (US$590,000) pay a further 4%.
- Social Security Taxes: The Ministry for Solidarity and Health and the Ministry of Economy and Finance administer the general scheme. This covers unemployment and pensions for all salaried workers in the private sector through a network of national, regional, and local institutions and consultation with employers and employees. Around 80% of revenue comes from contributions and taxes calculated on percentage rates from employer and employees.
These are calculated on total earnings, as follows:
- Health, maternity, disability, death: 13% or 7% (employer)
- Autonomy solidarity contribution: 0.3%
- Old-age insurance (with upper limit): 6.9% (employee), 8.55% (employer), capped at €3,428 (US$4,044)
- Old-age insurance: 0.4% (employee), 1.9% (employer)
- Workplace accidents: (variable)
- Family benefits: 5.25% or 3.45% (employer)
- Social security surcharge (CSG): 9.2% (employee)
- Social security debt (CRDS): 0.5% (employee)
- Unemployment: 4.05% (employer), capped at €13,712 (US$16,176)
- Unemployment wage guarantee (AGS): 0.15% (employee), capped at €13,712 (US$16,176)
- Supplementary pension (Bracket 1): 3.15% (employer), 4.72% (employee), capped at €3,428 (US$4,044)
- Supplementary pension (Bracket 2): 8.64% (employer), 12.95% (employee), applies between €3,428 (US$4,044) and €27,424 (US$32,353)
For more information on this complex system, click here. And for more information on France's taxation rules and administration, check out our France Tax page.
Stress Free Global Expansion
Bradford Jacobs’ Employer of Record (EOR) solutions smooth your route into France and every new territory targeted for worldwide expansion. We are on call every step of the way to ensure your company clear all the hurdles to establish a successful presence in the powerful French economy. Contact us today to see what our payroll services can do for you.