Payroll tax
Verified 01 January 2024 - Legal and Administrative Information Directorate (Prime Minister), Ministry of Finance
The payroll tax is payable by employers who employ employees and who are not subject to VAT. They must also be established in the mainland or in an overseas department. The payroll tax is calculated on the remuneration paid during the year by applying a progressive scale.
It's due to any employer domiciled or established in France, irrespective of the place of residence of the employee or of his activity, and who fulfills one of the following conditions:
- In the year of payment of the remuneration, he shall not be subject to payment of the VAT: titleContent.
- In the year in which the remuneration is paid, it is partially taxable at the VAT: titleContent and was subject in the previous year to VAT on less than 90% of her CA.
- The year before the payment of remuneration, less than 10% of its turnover is subject to VAT.
The tax applies in particular to the following employers:
- Certain liberal professions
- Public establishments other than groups of municipalities
- Banking and financial institutions, insurance companies, certain insurance brokers and stockbrokers
- Administrative or social body (association, profit-making body, etc.)
- Business engaged in a civil activity (investment business, real estate business) except business of building or trading of property
- Landowners
- Cooperative organizations, mutual societies and agricultural professionals
Example :
The employer is subject payroll tax under 2023 (calculated on remuneration paid in 2022) if it meets one of the following 2 conditions:
- He was not subject to VAT payment in 2022.
- He was subject to VAT on less than 10% of the turnover achieved in 2021.
The following employers are exempt payroll tax:
- Employers whose previous calendar year's turnover excluding tax does not exceed the limits of the exemption from VAT (this is the case for micro-entrepreneurs, for example)
- State and public authorities
- Individuals who employ a live-in worker or a maternal assistant. This must be a full-time person or several part-time persons representing a full-time equivalent. The individual employer of a part-time homeworker is therefore not exempt from tax.
- Certain agricultural employers (crop and livestock farms, training and training farms, etc.)
- Higher education institutions issuing a State Diploma Bachelor +5 (universities, business schools, colleges, etc.)
- Certain public institutions
- Public Cultural Cooperation Institutions (EPCCs)
- Public Environmental Cooperation Institutions (EPCEs)
Warning
The exemption shall apply to remuneration paid by the EPCE from 1erJanuary 2024.
The payroll tax is based on the CSG base applicable to income from activities . Income from employment includes wages, bonuses and allowances and benefits in kind or cash.
Sums | Included in the calculation of the tax? |
|---|---|
Amounts due in return for or in connection with work | Yes |
Income of the artist-authors | Yes |
Employee Allowance and Parliamentary Allowance | Yes |
Guaranteeing the resources of disabled workers | Yes |
Income from the rental of all or part of a business, commercial, craft or industrial establishment | Yes |
Occupational income of the self-employed | Yes |
Flat-rate deduction for professional expenses | No |
Amounts corresponding to replacement earnings (compensation in the event of an accident at work or sickness, social security benefits paid through the employer, etc.) | No |
Contributions to training insurance funds | No |
Remuneration paid by industrial technical centers | No |
Daily social security allowances | No |
Allowances for partial activity or cessation of activity | No |
Part of the salary paid to apprentices equal to 11% minimum wage for growth in a company of more than 10 employees (apprenticeship contracts) | No |
Salaries paid to apprentices by a company of less than 11 employees (apprenticeship contracts) | No |
Remuneration of Teachers at Apprenticeship Training Centers (AFCs) | No |
Compensation paid in the framework of employment support contracts or future contracts (CUI-CAE contracts) | No |
Bonuses paid to trainees within the limit of the exemption from contribution (the part beyond the minimum bonus is subject to tax) | No |
FYI
exempt remuneration is still subject to the CSG.
The company that is liable to pay VAT on less than 10% of the turnover achieved in the year before the payment must pay the payroll tax by calculating its subjugation report.
Calculation = (Revenue not eligible for deduction of VAT (year N-1) / total revenue (year N-1)) x 100
For these companies, the tax base on wages is obtained by multiplying the total amount of taxable remuneration (year N) by the tax liability ratio, i.e.:
Calculation = Total amount of taxable remuneration (year N) x Taxation report
Example :
Taxable earnings (year N) = 100
Total revenue (year N-1) = 300 divided as follows:
- Revenue from transactions outside the scope of VAT: 160
- Revenue from transactions within the scope of VAT: taxable transaction: 60, exempt transaction not giving rise to deduction: 80.
The payroll tax liability ratio is equal to: ((160 + 80) / 300) x 100 =80%
For these organizations, thetax base is equal to: 100 x 80% = 80.
FYI
If the annual amount of the tax is less than €1,200, the tax is not due. There is then no declaration of liquidation and regularization to be filed.
In the metropolis
The tax is calculated on the basis of a progressive scale which applies to the annual individual remuneration paid (taxable basis).
The scale comprises a standard rate, applied to the total amount of individual gross earnings, and increased rates, applied to individual gross earnings above certain thresholds.
Rate Type | Overall rate | Fraction rate | Annual gross salary paid in 2022 (tax payable in 2023) | Monthly gross salary paid in 2022 (tax payable in 2023) | Annual gross salary paid in 2023 (tax payable in 2024) | Monthly gross salary paid in 2023 (tax payable in 2024) |
|---|---|---|---|---|---|---|
Normal rate | 4.25% | 4.25% | Up to €8573 | Up to €714 | Up to €8984 | Up to €748 |
1er increased rate | 8.50% | 4.25% (8.50 - 4.25) | Enter €8573 and €17,114 | Enter €715 and €1426 | Enter €8985 and €17,936 | Enter €748 and €1494 |
2nd rate increased | 13.60% | 9.35% (13.60 - 4.25) | Greater than €17,114 | Greater than €1426 | Greater than €17,936 | Greater than €1494 |
The taxable base and the net amount of tax due shall be rounded to the nearest euro.
Example :
For an employee who has been paid a monthly gross salary of €5,600 in 2023, the payroll tax calculation is as follows:
[5600x 4.25%] + [(1494-748) x 4.25%] + [(5600 - 1494) x 9.35%=
For this employee, the payroll tax that the employer will have to pay in 2024 is: €653.61 rounded to €654.
Overseas
Guadeloupe, Martinique or Reunion
The rate of 2.95% shall apply to the total amount of individual gross earnings.
Guyana or Mayotte
The rate of 2.55% shall apply to the total amount of individual gross earnings.
The discount is a reduction in the amount of a tax payable.
The reduction is a flat-rate or proportional reduction applied on the basis of a tax calculation (income, value of property, etc.). It's only for associations.
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Discount for the benefit of the employer
The employer whose annual tax amount is between €1,200 and €2,040 has a discount equal to 3/4 of the difference between this limit of €2,040 and the actual amount of its tax.
Example :
If the annual amount of the payroll tax is between €1,200 and €2,040., the haircut is: 0,75 x (€2,040 - actual amount of tax).
This mechanism shall also apply on a monthly or quarterly basis.
For example:
- If the monthly amount of the payroll tax is between €100 and €170, valuation haircut = 0,75 x (€170 - actual amount of tax)
- If the quarterly payroll tax amount is between €300 and €510, valuation haircut = 0,75 x (€510 - actual amount of tax)
The amount of tax due to be entered on line A of Print No 2501 or 2501 K corresponds to the amount of tax due after any application of the valuation haircut.
This haircut shall be adjusted at the time of the annual settlement on the annual declaration of settlement and adjustment no 2502.
Reduction of associations
Associations benefit from a rebate of €22,535for the tax due on wages paid in 2023.
This tax is therefore payable only for the part of its amount exceeding that amount.
The organisms concerned by the abatement are:
- Association Law of 1901
- Association located in Bas-Rhin, Haut-Rhin or Moselle
- Trade union and its unions
- Approved intermediate association
- Some mutual societies
- Foundation recognized as being in the public interest
- Cancer Center
- Groupement de coopération sanitaire et de coopération sociale et medico-social (it must be made up of legal persons who benefit from an allowance on the amount of the tax on salaries normally due)
The rates of reporting to the companies' tax office (EIS), paying (monthly, quarterly or annual) and the amount to be paid are determined by the employer according to the amount of tax paid in the previous year.
Warning
The payroll tax shall not be payable where its annual amount does not exceed €1,200.
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Tax paid last year less than € 4000
The company must make a annual declaration before 15 January of the year following the payment of wages. She will have to use the annual declaration form no. 2502 must be transmitted electronically.
Tax paid in the previous year between €4,000 and €10,000
The company must make its declaration every 3 months within 15 days of the previous quarter.
It will have to provide 3 statements of provisional payments #2501 before 15 April, 15 July and 15 October.
It will also have to send a statement of regularization #2502 before 31 January of the year following the payment of the remuneration.
Tax paid in the previous year over €10,000
In the event of a transfer or cessation of activity, the employer must make the declaration within 60 days.
In case of death of the employer, the declaration must be made within 6 months.
Warning
payments of the tax must be made by dematerialized channel in the company’s professional area or through an EDI provider.
Effective rate of payroll tax
Exemption threshold and tax rebate for certain organizations
Increased rates
Reporting modes
Calculation of the social contribution base on working income and replacement income
Simulator
Online service
Online service
Form
Ministry of Finance
Ministry of Finance
Ministry of Economy