French Social Security
This page outlines
- Taxable income
- Social Security rates
- International aspects
- Social Security Optimisation
Each household's circumstances are different, and the legislation is complex. We strongly recommend obtaining advice from qualified professionals in France - and we would be glad to assist.
French Social Security contributions enable residents to obtain generous benefits such as access to one of the world's best medical systems and some of the world's highest unemployment allowances. Understandably, this requires some of the world's highest contributions...
The contributions also count towards state pensions though no-one knows exactly how much benefit will be obtained when they retire. The French government is strongly encouraging people to organise their own private pensions and I would advise working individuals to take advantage of the government incentives and consider any future state pension simply as "pocket money".
Residents who are not covered by either the French or another EU scheme can sometimes pay voluntary contributions (known as CMU) to get access to medical cover. Since November 2007, the conditions for access to CMU by EU citizens have been severely restricted. Please contact us for further details.
Social Security contributions are payable on all earned income whether from salaried employment, directorships, partnerships, self-employment, etc.
If you set up a company and pay yourself an unrealistically small salary - but large dividends - you may find the French social security at your door...
The calculations for contributions are extremely complex being made up of a large number of elements. For the self-employed, the contributions are calculated based on income from the year before last.
Salaried employees are typically subject to employer contributions of around 45% and employee contributions of around 25%
Self-employed are typically subject to contributions of around 30%. This excludes any rights to unemployement benefits. Please note the rate is not fixed: it can reach around 40% for low incomes and around 15% for high incomes. Please contact us if you require an approximate calculation.
There is a specific treaty covering social security contributions and benefits for all EU citizens. The objective is that citizens will pay contributions in only one country at a time - but can move around the EU obtaining benefits wherever they are.
In addition, the treaty clarifies the rules for secondments (being sent by your employer for one or two years to a different country) and frontier workers (working in one country and living in another).
For non-European citizens living in France, similar treaties exist to prevent dual payment of contributions while ensuring a minimum level of permanent social cover.
We would be glad to provide further details of the EU or other international treaties on social security.
OPTIMISATION : HOW TO REDUCE SOCIAL SECURITY
1. Structures in France.
Given the difference in contribution rates between salaried and self-employed workers, you should carefully weigh up the alternatives if you intend to create a small business yourself in France.
There are many legal considerations to take into account when setting up a business such as limited liability. However, due to the high cost of social security contributions, they can be a major influence in the way any small business is set up.
2. International workers
Given the difference in rates between France and other EU companies, you should consider the possibility of taking advantage of the international treaties.
If a secondment can be arranged, this may be a suitable solution for one or two years. If your work can be carried out outside France, you may be able to qualify as a frontier worker.
Both solutions can provide greatly reduced levels of contributions - yet ensure continued benefits within France.
3. Alternative remuneration
So long as you receive a "reasonable" minimum salary, any additional income can be received through alternative methods such as dividends. The reduction in social security charges can be substantial - and there may be income tax advantages too. However, please note that the authorities are tightening up in this area. Since 1 January 2009, dividends paid to certain company directors are liable to the full spectrum of social charges.
We strongly recommend obtaining advice from qualified professionals in France - and we would be glad to assist.