Payroll taxes in France: An employer’s guide

When you hire in France, you — as the employer — are responsible for calculating, withholding, and submitting payroll taxes from your team members’ pay slips. For some taxes, you are also required to make employer contributions.

In this article, we’ll explain clearly which taxes you need to withhold, which taxes you need to contribute to, and how to remit and make payments. So let’s jump straight in.

What is payroll tax?

Payroll taxes are the contributions employees and businesses make to the government to fund public programs, such as retirement, healthcare, and unemployment insurance. They typically include income tax and social contributions, and are set at pre-determined rates.

These rates (and the rules governing them) vary by country, but it’s every employer’s responsibility to ensure they are compliant, and that they are withholding and submitting the correct amounts.

What is the difference between payroll taxes and corporate taxes?

Generally, payroll taxes are tied to your employees’ wages, while corporate taxes are based on your company’s profits. 

Which payroll taxes do you need to withhold from your employee in France?

In France, the taxes you’ll need to withhold are:

Income tax (Prélèvement à la Source)

French residents are taxed progressively based on their level of income, at rates of between 0% and 45%. You must withhold taxes from their pay slip based on these rates.

Note that high earners (over €250,000) may be subject to additional surtaxes.

When to pay: Payments must be made by the 15th of the following month in which the salaries were paid. Small businesses may be eligible to make payments quarterly, rather than monthly.

Employee social contributions

Employees are required to make two social contributions, which fund social security and help reduce French national debt. These are:

• General Social Contribution (CSG): 9.2% of gross salary (6.8% deductible for income tax purposes)

• Social Debt Repayment Contribution (CRDS): 0.5% of gross salary

When to pay: Monthly.

Old-age insurance

This tax is used to fund pensions and provide retirement benefits. It’s taxed at 6.9% on earnings up to €46,368 annually (plus 0.4% on amounts above this threshold).

When to pay: Monthly.

Supplementary pension contributions (Agirc-Arrco)

Agirc-Arrco is a mandatory supplementary pension scheme for private-sector employees. Its purpose is to provide an additional layer of retirement benefits on top of the basic pension system.

Employees earning up to €46,368 (Tranche 1) are taxed at 3.15%, while employees earning between €46,368 and €370,944 (Tranche 2) are taxed at 8.64%.

When to pay: Monthly.

Note that you may also be required to withhold additional taxes for certain employees, such as child support payments, student loan repayments, or any other court-ordered garnishments.

Which payroll taxes does your business need to contribute to?

As well as withholding the contributions listed above, you are also required to make your own contributions, as follows:

Health, maternity, disability, and death insurance

This contribution funds healthcare services, maternity leave, disability support, and death benefits for employees.

You must pay 7% on your employees’ annual wages up to €52,416, plus 13% on amounts above this threshold.

When to pay: Monthly.

Old-age insurance

You must also make old-age insurance contributions, which support the basic state pension system.

You must pay 8.55% on earnings up to €46,368, and 2.02% on amounts above this threshold.

When to pay: Monthly.

Family benefits

This contribution provides financial support to families, including child allowances and parental leave benefits.

You must pay 3.45% for employees with annual salaries up to €52,416, or 5.25% over this threshold.

When to pay: Monthly.

Accidents at work and occupational diseases

This covers compensation and medical expenses for work-related injuries and illnesses. You must pay approximately 0.77%, although this varies by industry.

When to pay: Monthly.

Unemployment insurance

This tax provides financial assistance to unemployed individuals, facilitating their return to work. You must pay 4.05% on your employees’ earnings up to €15,456 monthly.

When to pay: Monthly.

Supplementary pension contributions (Agirc-Arrco)

You must also make contributions to Agirc-Arrco. For Tranche 1 employees, you must pay 4.72%; for Tranche 2, you must pay 12.95%.

When to pay: Monthly.

To quickly see a full breakdown of payroll taxes and employment costs for your French hire(s) based on their salary, use our free Employee Cost Calculator tool.

How do you remit and pay payroll taxes in France?

To pay these taxes, you will first need to calculate the correct amounts for withholding. If you use Remote Payroll or Remote EOR, we will do this for you.

For income tax withholding, you must register with the French tax authorities to obtain a SIRET number, and create an online account. You must then file and pay through the Net Enterprises online portal.

Social security contributions are reported and paid through the monthly Déclaration Sociale Nominative (DSN) system. Payments are typically made via SEPA direct debit, requiring you to provide your bank details during registration.

How do you manage payroll taxes as an international employer?

When you hire a France-based team member from abroad, there are several ways you can manage their payroll and payroll taxes.

If you already have your own legal entity in France, you can:

• Handle it in-house. You can hire your own payroll tax specialists and manage everything internally. This can be costly, however.

• Use a local third party. You can hire a local firm to handle payroll, although this can be unreliable, costly, and pose data risks.

• Use a PEO. A professional employment organization (PEO) acts as an outsourced HR provider, and includes payroll.

• Use a global payroll provider. Global payroll providers — like Remote — have local specialists in multiple countries, ensuring that you are fully compliant with all tax requirements in each one. This is especially convenient if you have (or plan to have) employees in different countries, as you can manage all of them through one platform.

If you don’t have your own entity in France and you still want to hire there, you can:

• Set up your own entity. This can be extremely costly and time-consuming, but if you plan on establishing your business long-term in France, it might be a viable approach. To pay your employees, you would then need to choose one of the options above.

• Use an EOR. Employer of record (EOR) providers — like Remote — enable you to quickly and easily hire anywhere in the world, and also handle all the core HR functions (such as compliance and payroll). As well as being generally more cost-effective than opening your own entity, this option is highly scalable and, again, enables you to streamline all your global HR tasks in one place. How does an EOR work?

Global HR —

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EOR, Payroll, or both: What does your business need?

Understand the difference between EOR and payroll services — and clarify which one your business needs to pay your international team members.

What about independent contractors?

In France, independent contractors are classified differently to employees. As a result, they (in most cases) are responsible for calculating, managing, and paying their own taxes.

However, it’s crucial to understand the difference between contractors and employees, as you may inadvertently create misclassification risk. This can result in severe fines and penalties for your business. Learn more about hiring contractors in France.

How can Remote help?

Knowing which payroll taxes you need to calculate, withhold, and contribute to requires local expertise, especially as these rules can — and do — change. And if you make a mistake or fail to comply, the financial consequences can be significant.

Whether you have your own entity in France or not, Remote ensures that you are withholding and contributing the correct amounts, and that you are fully compliant at all times with local tax and employment laws. We also provide 24/7 support for any guidance you may need.

To see how we can help — and to learn which approach is the most suitable for your business — speak to one of our friendly payroll experts today.

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