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Employing in France

At a glance

Employment in France

Employing workers in France could be a confusing and tedious process. There is a lot of bureaucracy associated with it and most of the documents must be drafted in French. Overall, employment relationships are subject to strict regulation, especially in the area of employment termination. They heavily rely on the Labor Code, case law of the French Supreme Court (“Cour de Cassation”) and collective bargaining agreements.

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Payroll & Tax in France

Payroll and taxation in France will typically depend on the type of business structure being employed by companies operating in the country. The primary concerns for a foreign company operating or incorporating in France would be individual income tax for employees, social security costs, health insurance contributions, payroll tax, sales tax, withholding tax, business tax and permanent establishment concerns.

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Immigration / Work Permits in France

Workers that are not citizens of the 28 EU countries will typically have to obtain a work permit to be employed in France, and will face all the challenges associated with this process. These include various bureaucratic obstacles, a lot of paperwork and risk of not complying with French regulation in the area of migration (which tend to be very protective of their local workforce).

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Incorporation

Although the French government is quite supportive of new companies being established in the country (and bringing more capital investments), new companies will still face certain issues, such as French accounting rules and tax law. There are three main options for businesses incorporating in France: Branch Office (“succursale”), Liaison Office (“bureau de liaison”) and Subsidiary Company (“filiale”), with the former being the most common company form among foreign investors.

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GEO Solutions or DIY Employment in France?

Companies entering France must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities.  A GEO or France Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a French entity established that can run payroll.

A DIY approach will typically be delayed until there is a properly incorporated entity ready to run payroll and can be a costly option if registered capital is required. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.

Using Shield GEO Employer of Record Services in France

Payroll France
Management Fee for Employer of Record Services / Monthly Payroll Costs

Please contact us for a quote

Notes

Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.

 
Grossed 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).

Tax Returns Supplied

Yes

Corporate Tax Requirements

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.

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.

Corporate Income Tax Rate

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.

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.

Work Permits
Can Sponsor Work

Shield GEO does not provide sponsored work permits in France at this moment.

Work Permit cost

Shield GEO does not provide sponsored work permits in France at this moment.

Work Permit process

Shield GEO does not provide sponsored work permits in France at this moment.

Business Visas
Can do Business Visa

N/A

Business Visa Cost

Shield GEO does not sponsor business visas in France at this moment.

Others
Can supply private health care

N/A

Can assist opening bank accounts

N/A

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