Competitiveness and Employment Tax Credit (CICE)
Verified 01 May 2023 - Legal and Administrative Information Directorate (Prime Minister), Ministry of Finance
Since 2019, the Competitiveness and Employment Tax Credit (CICE) has been transformed into a permanent and immediate social contribution relief except in Mayotte. Companies that did not use their full CICE prior to this conversion retain the right to use it for tax payments from 2019 to 2021.
General case
The CICE was a tax advantage enjoyed by companies employing employees. It continues to exist in the form of a reduction in the permanent social contributions of these same companies. This new CICE formula has an immediate effect.
This relief is effectively reflected in the reduction of employers' social security contributions for an employee whose remuneration is less than or equal to 2.5 Smic.
For a full-time employee throughout 2023, the maximum compensation is €4,368.00 per month.
This reduction is reflected in concrete terms by a 6-point reduction in employers' social contributions to sickness insurance for remuneration payable from 1er January 2019.
Remuneration up to a maximum of 1.6 times the minimum wage, due from 1er October 2019, benefit from a 4.05-point reduction in employers' social security contributions.
The relief of social contributions concerns the company employing employees and are in any of the following situations:
- Company imposed on income tax or business tax based on actual profits. It doesn't matter how it's operated or what sector it's in.
- Company temporarily exempted by a land-use planning scheme (ZFU-TE: titleContent, ZRR: titleContent for example) or encouragement of creation and innovation (new company, young innovative companies).
Warning
self-employed workers (e.g. individual entrepreneurs, traders, craftsmen) working alone or with their spouses or partners of Civil partnerships with self-employed worker status cannot benefit from this scheme.
The CICE shall be calculated on the basis of total remuneration not exceeding 2,5 times the Smic: titleContent which have been paid in the course of a year. Wages exceeding 2.5 times the minimum wage are therefore not taken into account for the calculation of the CICE.
For individuals who are not employed on a full-time or full-year basis, the salary used to calculate the rebate is that corresponding to the hours of work specified in their employment contract. Only salaries not exceeding 2.5 Smic are eligible for the rebate.
This tax credit relates only to earnings which have been declared to social security and deducted for the calculation of employers' contributions. For example, basic salaries, overtime or overtime payments, bonuses, holiday pay, benefits in kind.
Bonuses paid to trainees are excluded.
Since January 2019, the CICE has been replaced by a long-term social security contribution reduction of 6% the remuneration paid for the current year. In 2022, the relief is calculated on 2022 earnings. In 2023, it is calculated on 2023 earnings.
The NSN must be submitted during the month following the period of paid employment.
The date differs depending on the size of the company:
- If the company employs less than 50 employees, the SFD must be made no later than the 15th day of the month following the period of paid work.
- If the company employs 50 or more employees, the SFD must be made no later than the 5th of the month following the period of paid work.
Please note
the rates and ceilings applied to social contributions shall be those for the period of activity, even if the salary is paid the following month.
An NSN must be issued for each establishment and include all employees associated with it. At each number of Siret corresponds to a DSN.
In Mayotte
The CICE is a tax advantage enjoyed by companies that employ employees. The CICE rate is 9% and it shall apply to remuneration of less than 2,5Smic: titleContent .
For a full-time employee throughout 2023, the maximum compensation is €4,368.00 per month.
The CICE is about company employing employees and are in any of the following situations:
- Company imposed on income tax or business tax based on actual profits. It doesn't matter how it's operated or what sector it's in.
- Company temporarily exempted by a land-use planning scheme (ZFU-TE: titleContent, ZRR: titleContent for example) or encouragement of creation and innovation (new company, young innovative companies).
Warning
self-employed workers (e.g. individual entrepreneurs, traders, craftsmen) working alone or with their spouses or partners of Civil partnerships with self-employed worker status cannot benefit from this scheme.
The CICE shall be calculated on the basis of total remuneration not exceeding 2,5 times the Smic: titleContent which have been paid in the course of a year. Wages exceeding 2.5 times the minimum wage are therefore not taken into account for the calculation of the CICE.
For persons who are not employed full-time or year-round, the salary which will be taken into account for the calculation of the CICE is that corresponding to the duration of work provided for in their employment contract. Only wages not exceeding 2.5 Smic are eligible for the tax advantage.
This tax credit relates only to earnings which have been declared to social security and deducted for the calculation of employers' contributions. For example, basic salaries, overtime or overtime payments, bonuses, holiday pay, benefits in kind.
Bonuses paid to trainees are excluded.
The CICE rate is 9% the remuneration paid during the year.
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income tax company
In order to benefit from the CICE, the employer must comply with certain reporting obligations with the Urssaf and the tax administration, including in the case of pre-financing:
- It must have declared the tax credit base and the remuneration concerned by the CICE when drawing up each Urssaf contribution slip. It will have to enter it on the specific line "Tax credit for competitiveness and employment" with the rate (indicated on the sheet) corresponding to it.
- The company must attach the annual declaration of performance to it #2069-RCI that summarizes all tax reductions and credits for the fiscal year.
A calculation aid sheet #2079-CICE-FC-SD allows you to calculate the amount.
The deadline for the submission of the declaration is 2e working day after 1er May (when filing the tax book). The company making the teledeclaration has an additional period of 15 days. The tax forms to be attached are the tax return no. 2042-C-PRO and the form #2069-RCI.
business tax company
In order to benefit from the CICE, the employer must comply with certain reporting obligations with the Urssaf and the tax administration, including in the case of pre-financing:
- It must have declared the tax credit base and the remuneration concerned by the CICE when drawing up each Urssaf contribution slip. It will have to enter it on the specific line "Tax credit for competitiveness and employment" with the rate (indicated on the sheet) corresponding to it.
- The company must attach the annual declaration of performance to it #2069-RCI that summarizes all tax reductions and credits for the fiscal year.
A calculation aid sheet #2079-CICE-FC-SD allows you to calculate the amount.
- If the financial year ends on December 31, the deadline for filing the return is December 2e working day after 1er May (when the tax book is filed), which is May 3
- If the year-end date is not 31 December: the deadline for filing the return is 15 December 4e month following the end of the financial year. For example, January 15 for a fiscal year ended September 30, or May 15 for a fiscal year ended January 31.
FYI
the part of the CICE that could not be deferred is not taxable. The tax advantage it provides should not be recognized in the company's profit or loss, nor should it have any impact on CVAE: titleContent or employee participation in the company's performance.
The cash generated by the tax credit should not be used to finance an increase in distributed profits, nor should it be used to increase the salaries of company managers.
The company must record in its annual accounts the use of the tax credit, which must appear in its accounts under the staff expense account.
Imputation to tax payable
The CICE can be used to pay income tax or business tax.
The CICE is calculated on the wages paid during a calendar year, it may not be used for a financial year ending before the end of the CICE reference period.
Thus, the CICE calculated on salaries paid in 2022 can be subtracted from the tax due for the year ended December 31, 2022.
If the CICE cannot be used in full (in case of surplus), it can be used to pay the tax due over the next 3 years. It can be postponed.
Claim for reimbursement
The company for which the entire CICE could not be carried forward to the date of 1er january 2022 can use them for another 3 years. It may request reimbursement of the unused part of CICE at the end of that period.
The application for reimbursement must be made in one of the following ways:
- If the company is subject to business tax, it must apply for a refund using the form n°2573-SD. It can be done in EFI or EDI mode.
- If the company is subject to income tax, it must apply for a refund using the Form n°2042 C-PRO.
Immediate return
By way of exception, the immediate repayment of the claim which has not been deducted from the tax due in the year of establishment of the CICE (i.e. in 2023 for the CICE 2022) may be requested by means of tax form no. 2573, by the following companies:
- SMEs in the Community sense
- Young Innovative companies (JEI)
- New companies (eligible application in year of creation and subsequent 4 years)
- Companies in difficulty (in the course of conciliation, safeguard, recovery or liquidation proceedings)
In order to improve its cash flow, the company may transfer the CICE, which could not be carried over and which the government still owes to it, to a credit institution, which becomes the owner.
The claim ‘in germ’ may also be assigned. It is calculated in the year of payment of the remuneration on which the tax credit is based and before the calculation of the tax in N+1.
Once the future claim has been assigned, the assigning company can only exempt from tax the unassigned part of the CICE. The unassigned receivable is the difference between the assigned amount and the amount of the tax credit actually recognized when the return is filed.
There can only be one transfer per calendar year. In the majority of cases, the company may not make more than one partial assignment in the same year.
By way of exception, under the tax system for groups of businesses, the parent business of the group may make up to four partial assignments of the claim in the form of a pledge, without being able to exceed the number of entities making up the tax group.
The pre-financing is backed by an Oséo/BPI partial guarantee scheme for certain SMEs. It is up to the credit institution to request this guarantee, without the company having to take any particular action itself.
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