Taxing Wages 2023

France

Abstract

This chapter includes data on the income taxes paid by workers, their social security contributions, the family benefits they receive in the form of cash transfers as well as the social security contributions and payroll taxes paid by their employers. Results reported include the marginal and average tax burden for eight different family types.

Methodological information is available for personal income tax systems, compulsory social security contributions to schemes operated within the government sector, universal cash transfers as well as recent changes in the tax/benefit system. The methodology also includes the parameter values and tax equations underlying the data.

The national currency is the Euro (EUR). In 2022, EUR 0.96 equalled USD 1. In that year, the average worker earned EUR 41 540 (Secretariat estimate).

1. Personal income tax system

1.1. Tax levied by the central government on 2022 income

1.1.1. Tax unit

The tax unit is aggregate family income, but children over 18 are included only if their parents claim them as dependants. Other persons may be fiscally attached on certain conditions: unlike spouses, who are always taxed jointly, children over 18 and other members of the household may opt to be taxed separately. Beginning with the taxation of 2004 income, the law provides for joint taxation of partners in a French civil union (pacte civil de solidarité, or PACS), as soon as the PACS is signed. Reporting obligations for “PACSed” partners are similar to those of married couples.

Earned income is reported net of compulsory employer and employee payroll deductions, except for 2.4 percentage points worth of CSG (contribution sociale généralisée) and the 0.5% CRDS (contribution pour le remboursement de la dette sociale), which are not deductible from the income tax base.

1.1.2. Tax reliefs and tax credits

1.1.2.1. Standard tax reliefs

• Work-related expenses, corresponding to actual amounts or a standard allowance of 10% of net pay (with a minimum of EUR 472 and a ceiling of EUR 13 522 per earner).

• Family status: The “family quotient” (quotient familial) system takes a taxpayer’s marital status and family responsibilities into account. It involves dividing net taxable income into a certain number of shares [two shares for a married (or “PACSed”) couple, one share for a single person, one half-share for each dependent child, an additional share for the third and each subsequent dependent child, an additional half-share for single parent, and so on]: the total tax due is equal to the amount of tax corresponding to one share multiplied by the total number of shares. The tax benefit for a half-share is limited, however, to EUR 1 678 per half-share in excess of two shares for a couple, or one share for a single person, except for the first two half-shares granted for the first child of a single parent, in which case the maximum benefit is EUR 3 959.

1.1.2.2. Main non-standard reliefs available to the average worker

There are compensatory allowances in case of divorce if paid in a lump sum (25% reduction, capped at EUR 30 500); home employment costs (child care, home help, housekeeper…) (50% reduction up to annual expenditure of EUR 12 000 with additional EUR 1 500 per dependent), child care costs for children under six (50% reduction, up to annual expenditure of EUR 2 300); dependent children attending secondary school or in higher education; donations to charities or other organisations assisting those in needs; trade union dues, etc. The exemption of the employer’s participation to the collective contracts of supplementary health cover is abolished in the budget act for 2014 (i.e. income earned in 2013).

1.1.3. Tax schedule

 

	Fraction of taxable income (1 share, in Euros)	Rate (in %)
1st bracket	Up to 10 777	0
2nd bracket	From 10 777 to 27 478	11
3rd bracket	From 26 070 to 78 570	30
4th bracket	From 78 570 to 168 994	41
5th bracket	From 168 994	45

A special rebate for taxpayers with a low tax liability is applied to the amount of tax resulting from the above schedule before reductions and tax credits. To be eligible, the tax on the household’s income must be less than EUR 1 840 for single households and less than 3 044 for couples. The rebate is equal to 45.25 % of the difference between this ceiling and the amount of tax before the rebate.

1.1.4. Exceptional contribution on high revenues

An exceptional contribution on high revenues is based on the reference taxable income (“revenu fiscal de référence”). The tax rates are 3% from EUR 250 000 to EUR 500 0000 (single person), 4% over EUR 500 0000 (single person), 3% from EUR 500 000 to EUR 1 000 000 (married couple or civil union) and 4% over EUR 1 000 000 (married couple or civil unions).

1.2. Taxes levied by decentralised authorities

Local taxes levied on working households are:

• Residency tax ("taxe d’habitation”): since 2018, the residency tax on main residence has progressively decreased for all households. In 2021, 80 % of French households were not paying any tax anymore and the 20 % richer households benefitted from a 30 % tax reduction. Such reduction for the 20 % richer households increased to 65 % in 2022. From 2023 onwards, every household will be exempt from residency tax on main residence. Residency tax on secondary homes continues to apply at rates set by local authorities;

• Property taxes on developed and undeveloped land;

• There are common rules for each type of tax, to which certain municipalities make certain adjustments.

These local taxes, the rates of which vary widely, depending on the municipality, are not assessed here.

1.3. Universal social contribution (contribution sociale généralisée, or CSG)

The universal social contribution (CSG) was introduced on 1 February 1991. Since 1 January 2018, the rate of CSG has been 9.2%. This rate has been applied to a base of 98.25% as of 1st January 2012. The CSG is deductible against taxable income, but at a lower rate of 6.8%.

1.4. Contribution to the reimbursement of social debt (contribution au remboursement de la dette sociale, or CRDS)

The contribution to the reimbursement of social debt has been in effect since 1 February 1997. Like the universal social contribution, its base has passed to 98.25% of gross pay as of 1st January 2012. The rate is set at 0.5%. Unlike social security contributions, CRDS payments are not deductible from taxable income.

2. Compulsory social security contributions to schemes operated within the government sector

Some contributions are levied on a capped portion of monthly earnings. Since 1997, this ceiling has been adjusted once a year on 1 January. In January 2020, the ceiling was EUR 3 428 (or EUR 41 136 per year). It did not change in January 2021 and in January 2022.

2.1. Employee contributions

2.1.1. Pension

• 6.9% on earnings up to the ceiling (unchanged compared to 2021).

• 0.4% on total earnings (unchanged compared to 2021).

2.1.2. Illness, pregnancy, disability, death

• 0.0% on total earnings (0.0% in 2021)

2.1.3. Unemployment

• 0.0% on earnings since 1^st October 2018.

2.1.4. Others

• Supplemental pension1 for non-managers and managers: minimum 3.15% up to the ceiling and 8.64% between one and eight times the ceiling.

• The CEG (“Contribution d’Équilibre Général”) replaced AGFF and GMP in 2019. The rate of this contribution is, for non-managerial workers and managers, 0.86% of earnings up to the social security ceiling and 1.08% between one and eight times the ceiling.

• The CET (“Contribtion d’Équilibre Technique”): a contribution of 0.14% on total earnings up to eight times the ceiling, for employees who earnings exceed one time the ceiling.

2.2. Employer contributions

2.2.1. Pensions

8.55% (8.55% in 2021) of gross pay, up to the ceiling, plus a 1.90% (1.90% in 2021) levy on total pay.

2.2.2. Illness, pregnancy, disability, death

13.0% of total earnings (after 13.0% in 2021). The rate has been reduced to 7.0% up to 2.5 times the minimum wage since 1^st January 2019 with the conversion of the CICE into a permanent cut in social contributions.

An additional contribution of 0.3% (contribution de solidarité autonomie – CSA) is levied on total salary.

2.2.3. Unemployment

4.05% of earnings (4.05% in 2021) (4.5%, 5.5% or 7% for some temporary contracts), up to four times the ceiling; in addition, 0.15% (0.15% in 2021) up to four times the ceiling to endow the salary guarantee fund (AGS).

2.2.4. Work-related accidents

Contribution rates for work-related accidents vary by line of business and are published annually in the official gazette (Journal officiel de la République française). In 2022, the average rate is 2.23% (after 2.24% in 2021.

2.2.5. Family allowances

5.25% of total pay. The rate has been reduced to 3.45% up to 1.6 times the minimum wage from 2015 with the responsibility pact, up to 3.5 times the minimum wage from April 2016.

2.2.6. Others

• Supplemental pension: for non-managers and managers, 4.72% up to the ceiling and 12.95% between one and eight times the ceiling.

• The CEG (“Contribution d’Équilibre Général”) contribution is 1.29% up to the ceiling, 1.62% between one and eight times the ceiling for managers and non-managers. In the table, this is combined with the rates for supplemental pensions.

• The CET (“Contribution d’Equilibre Technique”), a contribution of 0.21% on total earnings up to eight times the ceiling for employees whose earnings exceed one time the ceiling.

• Others (construction, housing, apprenticeship, further training): 2.646% of pay (for enterprises with more than 20 employees). The transport tax is not included because it varies geographically. Contributions to finance a fund dedicated to workers exposed to distressing work conditions (“Fonds Pénibilité”) vary with the levels of exposure of each worker and are therefore not included.

2.2.7. Reduction of employer-paid social insurance contributions

The reduction of employer-paid social insurance contributions, introduced in 1993, has been gradually extended and strengthened. As of 2022, it includes two types of measures:

(i) The general reduction of employer-paid social insurance (ex-“Fillon Act”, also called today “zero contributions URSSAF”) is a decreasing reduction in social security contributions, which eliminates all common law social contributions paid at the minimum wage and whose level decreases with wage to become zero for a gross annual wage equal to 1.6 times the gross annual minimum wage. It applies irrespective of the number of hours worked for workers with contracts of at least three months. Since 1^st of January 2022, the maximum reduction is 32.35% for companies with more than 50 employees. For companies with less than 50 employees, it is 31.95% since January 1^st 2022.

(ii) A proportional reduction in health insurance and family allowance contributions, which allow for a reduction of 6 and 1.8 percentage points respectively for gross annual wage below 2.5 and 3.5 times the gross annual minimum wage. The 6 percentage point’s reduction replaces since 1^st January 2019 the competitive tax credit (CICE – crédit d’impôt pour la compétitivité et l’emploi), whereas the 1.8 percentage point reduction was introduced in 2015 by the Responsibility Act (Phase 1).

The gross annual minimum wage (for 1 820 hours) was changed twice in 2022: it was at EUR 19 237 from January 1^st 2022, increased to EUR 19 747 from May 1^st 2022 and increased again to EUR 20 147 from August 1^st 2022.

3. Universal cash transfers

3.1. Main minimum social benefits

The RSA (“Revenu de Solidarité Active”) is the minimum income benefit. However, the eight family types studied here earn too high an income to benefit from this benefit.

3.2. Main family benefits (in respect of dependent children)

Family allowances: the monthly base for family allowances (BMAF) was equal to EUR 414.81 between January 1^st and end of March 2022. It was automatically adjusted on April 1st 2022 to EUR 422.28. As an exception in a context of high inflation, an anticipated adjustment of the BMAF amounts occurred on July 1^st, leading to a +4% increase amounting to EUR 439.17. The CRDS is levied on family allowances at a rate of 0.5% (no deduction). The amounts in % of BMAF are before CRDS.

• The family allowances, granted to families with two or more children, are subject to revenue conditions since 1 July 2015, and adjusted every year:

  • Up to EUR 70 074 (+EUR 5 839 per child after the second child), the rate is 32% for two children and 41% per additional child. An extra amount of 16% of the BMAF is reversed if the child is over 14 years old (the extra amount is not incorporated into the model).

  • Between EUR 70 074 (+EUR 5 839 per child after the second child) and EUR 93 399 (+EUR 5 839 per child after the second child), the above rates are divided by 2.

  • Beyond EUR 93 399 (+EUR 5 839 per child after the second child), the above rates are divided by 4.

• ASF (Allocation de Soutien Familial): extra child benefit for isolated parent is at most 28.13 % of the BMAF per month. It is reduced by the amount of child support paid by the other parent to the family.

• ARS (Allocation de Rentrée Scolaire): The amount payable depends on the age of the child to reflect needs. The allowance is payable to families or persons with children aged 6 to 18 attending school, and whose income is below a certain level (not incorporated into the model).

 

Age of the child	Percentage of the BMAF in 2021
6–10 years	89.72%
11–14 years	94.67%
15–18 years	97.95%

• Family supplement (Complément Familial): 41.65% of the BMAF. Subject to revenue ceilings, this is paid to families as of the third child aged between 3 and 21. An extra amount (20.83% of BMAF) is reversed for families whose incomes are below a given threshold. The family supplement is not incorporated into the model.

• Early childhood benefit (not incorporated in the model) known as PAJE (Prestation d’Accueil du Jeune Enfant): subject to revenue ceilings. It includes:

  • A birth grant of 229.75% of the BMAF received at the 2nd month following the birth.

  • A grant of 459.5% of the BMAF is received upon the adoption of a child.

  • A benefit (“allocation de base”) of 41.65% (or 20.825% depending on the family income) of the BMAF a month from the birth of the child until three years of age.

3.3. Housing benefits

The housing benefits are not included in the model.

3.4. In-work benefit

The November 2014 Supplementary Budget Act eliminated the earned income tax credit (Prime pour l’emploi, PPE) so that it could be merged with the in-work income supplement (RSA Activité) and become a single in-work benefit. The in-work benefit was created by the Act of 17 August 2015 on Labour‑Management Dialogue and Employment, and has been in place since 1 January 2016. The in-work benefit is better targeted to promote a return to full-time work for low-paid workers. The benefit is not paid if its monthly amount is less than EUR 15.

The amount of in-work benefit is equal to a targeted income, less the maximum between resources and a lump sum. The lump sum (montant forfaitaire de la prime d’activité) was equal to EUR 553.71 from January 1^st 2022 to April 1^st 2022, it then increased to EUR 563.68 and increased again on July 1^st 2022 to EUR 586.23.

The targeted income is determined as the sum of three elements:

• A lump sum (before CRDS) modulated according to the composition of the household. For instance, it is increased by 50% for couple, then 30% for each child until two and 40% for each additional child. The amount may be increased for a temporary period2 for an isolated parent (128.412% of the basic lump sum for the adult and then 42.804% for each child).

• An individual bonus of 29.101% of the basic lump sum is planned for persons whose net income exceeds around 100% of the net minimum wage; this bonus grows linearly if the net income is between around 50% and 100% of the net minimum wage.3

• 61% of the net professional income of the household.

Then resources are assessed as the sum of the household income, plus the benefits (family benefits and others, except RSA and housing benefits).4 A lump sum depending on the composition of the household (12% of the basic lump sum for a single person, 16% for a couple, 16.5% for three persons or plus) is used to take into account the housing benefits.5

4. Main changes in the tax system and social benefits regime

• Tax system (2020 income)

  • New tax schedule following the personal income tax reform (Budget Act 2020):

The Budget Act of 2020 (article 2) introduced a reform of the personal income system. The reform provides a significant lowering of income tax rate for an amount of around 5 billion euros. 16.9 million taxpayers are benefitting from this reduction from the 1^st January, for an estimated average gain of around EUR 300. The changes are the following:

• the marginal rate of 14% is reduced at 11%;

• the tax rebate is reduced from three quarters to 45.25%;

• the special 20% tax reduction rate is removed.

If the final tax is less than EUR 61, no tax is payable.

• Increase of 1.7 points of CSG deductible (2018)

• Social benefits regime

  • Increased reduction of employer-paid contributions for family allowance: 3.45% instead of 5.25% for salary up to 3.5 times the minimum wage from April 2016 (1.6 times before).

  • Removal of sickness and unemployment employee contribution

  • Creation of a new cash transfer benefit for low-income workers (prime d’activité) which replace the PPE and the RSA activité.6

4.1. Changes to labour taxation due to the COVID pandemic in 2020 and 2021

The French government has launched several measures in order to address companies’ need for liquidity:

• Postponement of social and tax liabilities for all companies upon request for March, April, May and June 2020 (first lockdown) and from September to December 2020 (second lockdown). This measure was extended to August 2021 and for the whole period of administrative closures for affected businesses. Possibility to spread the payment of social security contributions over a period of up to 36 months. For large companies (or companies that are members of a large group), requests for postponement of tax and social security contributions payments are now conditional to the non-payment of dividends and the non-repurchase of shares between 27 March and 31 December 2020.

• Tax relief on a case-by-case basis: Cancellation of social security charges for companies with less than 10 employees that had to close down by administrative decision;

• Exemption and support for the payment of employer’s social security contributions for SMEs and VSEs during the administrative closure (activity periods from February to May 2020, September 2020 to May 2021), in particular in tourism, hotels, cafés and restaurants, events and cultural sectors. Since June 2021, exemptions from social security contributions for SMEs and VSEs have been interrupted, except for businesses that remained closed by administrative order. Support for social security contribution payments were extended but lowered (15 % of total payroll compared to 20 % previously) until August 2021, except in the confined overseas territories.

The French government has also launched measures for enhancing labour flexibility and household income support:

• Implementation of an exceptional and massive short-time work scheme (Covid STW). Between March 2020 and June 2021, employees have received an allowance of 70 % of their gross salary (approximately 84 % of their net salary), and 100 % for minimum-wage workers. STW earnings have been exempted from social security contributions and the CSG rate is lower (6.2 % instead of 9.2 %). The employer received full State compensation during lockdown and up to 85 % of the employee’s STW allowance, except for businesses that remained closed by administrative order and in the hardest hit sectors (hotels, restaurants, cafes, events, sport, culture, etc.). This scheme was in force until April 2021 for all businesses. As of May 2021, the State compensation has been gradually reduced (see table below).

• The exceptional short-time work scheme has been replaced by an Ordinary STW scheme (APDC, activité partielle de droit commun) since September 2021 for the hardest hit sectors, and since July 2021 for the other sectors. Employees receive an allowance of 60 % of their gross salary (approximately 72 % of their net salary), and 90 % for minimum-wage workers. Employers contribute up to 40 % of the employees’ STW allowance. Businesses operating in the hardest-hit sectors that are still impacted by COVID-19 restrictions such as density limits or that are reporting a drop in revenue of more than 80 % (from March 2021 to November 2021) and of more than 65 % (from December 2021) continued to benefit from a null contribution until March 2022. Since April 2022, all sectors returned to the Ordinary STW scheme.

 

	May 2021	June 2021	July 2021	August 2021	September 2021 to March 2022	April 2022 onwards
Plants closed by administrative decision or plants in priority sectors strongly affected *	Covid STW (0 remaining costs to the employer)	Covid STW (0 remaining costs to the employer)	Covid STW (0 remaining costs to the employer)	Covid STW (0 remaining costs to the employer)	Covid STW (0 remaining costs to the employer)	Ordinary STW (40% remaining costs to the employer)
Hardest hit sectors (S1 et S1bis)	Covid STW (0 remaining costs to the employer)	Covid STW (0 remaining costs to the employer)	Covid STW (15% remaining costs to the employer)	Covid STW (25% remaining costs to the employer)	Ordinary STW (40% remaining costs to the employer)	Ordinary STW (40% remaining costs to the employer)
Other sectors	Covid STW (15% remaining costs to the employer)	Covid STW (25% remaining costs to the employer)	Ordinary STW (40% remaining costs to the employer)	Ordinary STW (40% remaining costs to the employer)	Ordinary STW (40% remaining costs to the employer)	Ordinary STW (40% remaining costs to the employer)

* Firms in priority sectors with a 80% minimum loss of turnover in 2021, with regard to the same month in 2019 or 2020 (from March 2021 to November 2021) and with a minimum 65% turnover (from December 2021), and firms located in a territory subject to specific restrictions on with a turnover of at least 60% in turnover (from January 2021).

• Moreover, since July 2020 , a Long-Term job retention scheme (“Activité partielle de longue durée”, APLD) can cover employees of firms that are durably affected by the Covid crisis. It offers a more generous protection than the Ordinary STW scheme (employee allowance of 70 % of their gross salary, and only 15 % remaining costs to the employer). As for the STW scheme, the allowances are exempted from social security contributions and the CSG rate is lower (6.2 %). Unions and business must reach an agreement at firm, group or sector level on a reduction of working time. The agreement and the company’s document must include a diagnosis on the economic situation and activity prospects of the company, group or sector as well as the maximum reduction of working time (capped by law at 40 % of the usual working time per worker) and commitments in terms of jobs and training. These agreements can be concluded until December 31^st 2022 and the benefit of the allowance is granted within the limit of 36 months, consecutive or not, over a reference period of 48 consecutive months.

• Exemption from income tax and social security contributions for overtime worked by employees, from 16 March to 10 July 2020, up to a maximum of EUR 7 500 per year (currently EUR 5 000).

• An exceptional bonus scheme (Prime Exceptionnelle de Pouvoir d’Achat) introduced in 2018 was renewed in 2020 and 2021 to support households during the Covid 19 pandemic. The bonus scheme introduced in 2021 is exempt from tax and social security charges up to a limit of EUR 1 000. The amount of the exceptional bonus is capped at 2,000 euros under certain conditions (signature of a profit-sharing agreement or companies with less than 50 employees or companies that undertake to revalue jobs affected wages that have been affected by the pandemic). This bonus only concerns employees earning less than 3 times the minimum wage.

4.2. Changes to labour taxation in 2022

In August 2022, the French Parliament adopted the permanent raise of overtime pay exemption ceiling from EUR 5 000 to EUR 7 500 for income tax only, applicable from 2023 (tax on 2022 income).

The exceptional bonus scheme (Prime Exceptionnelle de Pouvoir d’Achat, see above) was replaced in July 2022 by a permanent value-sharing bonus scheme (Prime de Partage de la Valeur) with new conditions for the transitory phase applying from July 2022 to end of 2023, before the permanent scheme takes place from 2024 onwards. Value-sharing bonuses from July 2022 can be paid with a limit of EUR 3 000 (EUR 6 000 in the case of the signature of a profit-sharing agreement). Under the transitory scheme, tax exemptions vary depending on the employee’s salary. For employees earning less than 3 times the minimum wage, the payment of a value-sharing bonus is exempt from employer’s and employee’s social charges, income tax and the additional employer social contribution (forfait social). For employees earning at least 3 times the minimum wage, the exemption from social charges does not cover the CSG and CRDS and forfait social, if applicable, while income tax must also be paid. A permanent scheme will be applicable from 2024 for all employees onwards with only an exemption of social security contributions while CSG/CRDS, income tax and forfait social will have to be paid. The value-sharing bonus scheme is not taken into account in the model as it is not mandatory for employers to use it.

5. Memorandum items

To assess the degree of comparability between countries, the following additional information should be taken into account:

• Coverage is of the private and semi-public sectors of NACE sections C to K up to 2007 and NACE rev.2 sections B to N from 2008.

• The category “employees” encompasses all full-time dependent employees (excluding apprentices and interns).

• The figures presented are obtained by applying income tax and social contribution scales to gross salaries as listed in annual social data reports (DADS) in NACE.

There is a break in the average wage time-series starting with the year 2016. That year, the National Statistics Office (INSEE) changed their methodology for the calculations of the average wage.

Additionally, the 2020 annual average wage decreased compared to previous years due to the exceptional use of Covid STW schemes in 2020. Indeed, Covid STW schemes led to the substitution of unemployment benefits to wages for workers benefitting from such schemes while contract duration includes periods of STW during which the contract is only suspended. Therefore, the annualised average wage which is computed as the ratio of wages to contract length that year declined by 3.7 % between 2019 and 2020. The OECD series of compensation per employee used as a proxy to forecast the 2022 average wage (2022 forecast is obtained by applying to the latest level published by Insee, which refers to year 2020, the evolution rates published by OECD for years 2021 and 2022) decreased as well in 2020 for the same reason, although to a slightly lesser extent: compensation per employee declined by 2.7 % in 2020 followed by a rebound in 2021 and 2022 by 5.2 % and 5.4 % respectively. The discrepancy between the variation in the INSEE series of average wage and the variation in the OECD series of compensation per employee in 2020 (i.e., 1 percentage point) can be regarded as standard compared to historical differences between these two times series.7 Therefore, the usual methodology is kept unchanged: the 2022 average wage value is derived from the INSEE 2020 average wage level and evolutions in the OECD compensation per employee series in 2021 and 2022. No specific correction has been brought to forecast in order to take into account the difference between these two series for 2020 since this difference is not particularly important compared to what is observed in other years.

2022 Parameter values

 

APW earnings	Ave_earn	41 540	Secretariat estimate
Income tax
Work expenses	work_rel_fl	472
	work_rel_ceil	13 522
	work_rel_rate	0.100
Tax schedule	tax_sch	0.000	10 777
		0.110	27 478
		0.300	78 570
		0.410	168 994
		0.450
	limit_demipart	1 678
	limit_sp_demipart1	3 959
Décote value	decote_sing	1 840
	decote_mar	3 044
	decote_pente	0.4525
Tax reduction	red_taux	0.0000
	red_seuil_1	0.0000
	red_seuil_2	0.0000
	red_seuil_dp	0.0000
	tax_min	61
CEHR	cehr_rate1	0.0300
	cehr_rate2	0.0400
	cehr_ceil1	250 000
	cehr_ceil2	500 000
CSG+CRDS	CSG_CRDS_abat	0.0175
	CSG_rat_noded	0.0240
	CRDS_rat_noded	0.0050
	CSG_CRDS_rat_noded	0.0290
	CSG_rat_ded	0.0680
	CRDS_special	0.0050
Employee contributions
	pension_rate	0.0690
	pension_rate2	0.0040
Sickness	sickness_rate	0.0000
Unemployment	unemp_rate	0.0000
Extra pension (non-cadres) (incl. AGFF)	pens_rate_ex	0.0401
	pens_rate_ex2	0.09716
	pens_rate_ex3	0.0014
Employer contributions
	pens_empr1	0.0855
	pens_empr2	0.0190
Sickness	sickness_empr	0.0700
	Sickness_emp2	0.1300
Authonomous Solidarity Contribution	CSA	0.0030
Unemployment (incl. "garantie de salaire")	unemp_empr	0.0420
Accidents	accidents_empr	0.0223
Family Allowance	fam_empr	0.0525
	fam_empr_2	0.0345
Extra pension (incl. AGFF)	pens_empr_ex	0.0601
	pens_empr_ex2	0.1457
	pens_empr_ex3	0.0021
Others	others_empr	0.02646
CS reduction & corporate tax credit
Employer SSC reduction rate	SSC_empr_redrate2	0.6
Employer SSC reduction maximum	SSC_empr_red_max	0.3235
Employer SSC reduction SMIC reference	SSC_empr_SMIC_ref	1.6
	SSC_empr_SMIC2	3.5
	SSC_empr_SMIC3	2.5
Taux de réduction CICE	cice_red	0.0
	cice_max	2.5
Social transfers
Child benefit (second child)	CB_2	1 646.81
third & subsequent before CRDS	CB_3	2 109.98
First ceiling for CB	CB_c1	70 074.00
Second ceiling for CB	CB_c2	93 399.00
Increase of ceiling per child	CB_ceiling_extra_child	5 839.00
Extra child benefit for isolated parent	CB_isol	1 477.65
Prime d'activité	pa_forf	572.46
	pa_maj1	0.50
	pa_maj2	0.30
	pa_maj3	0.40
	pa_maj_isol1	0.28412
	pa_maj_isol2	0.42804
	pa_min	15*12
	pa_pct	0.61
	pa_bonus	0.29101
	pa_bonus1	=(59*(SMIC_horraire*12))/SMIC
	pa_bonus2	=(120*(SMIC_horraire*12))/SMIC
	pa_forf_logement1	0.12
	pa_forf_logement2	0.16
	pa_forf_logement3	0.165
Others
Social security contributions	SSC_ceil	41 136
Derivation of minimum income	SMIC_horaire	10.85
	SMIC_heures	1 820
	SMIC	19 744

2022 Tax equations

The equations for the French system are mostly calculated on a family basis. Variable names are defined in the table of parameters above, within the equations table, or are the standard variables “married” and “children”. A reference to a variable with the affix “_total” indicates the sum of the relevant variable values for the principal and spouse. And the affixes “_princ” and “_spouse” indicate the value for the principal and spouse, respectively. Equations for a single person are as shown for the principal, with “_spouse” values taken as 0.

 

	Line in country table and intermediate steps	Variable name	Range	Equation
1.	Earnings	Earn
	Quotient for tax calculation	Quotient	J	1+Married+IF(Children<3, Children/2, Children-1)+0.5*(Married=0)*(Children>0)
2.	Allowances
	CSG deductible	CSG_ded	B	CSG_rat_ded*((1-CSG_CRDS_abat)*MIN(earn;4*SSC_ceil)+Positive(earn-4*SSC_ceil))
	Salary net	earn_dec	B	earn-SSC-CSG_ded
	Work related	work_exp	B	MIN(work_rel_ceil, MAX(work_rel_rate* earn_dec, MIN(work_rel_fl, earn_dec)))
	Basic	basic_al	B	0
3.	Credits in taxable income	taxbl_cr	B	0
4.	CG taxable income	tax_inc	J	Positive(earn_dec_total-work_exp)
5.	CG tax before credits
	Calculation according to schedule	sch_tax	J	MAX(quotient*Tax(tax_inc/quotient, tax_sch), IF(Married, 2*Tax(tax_inc/2, tax_sch)-limit_demipart*(quotient-2), Tax(tax_inc, tax_sch)-(Children>0)* (limit_sp_demipart1+limit_demipart*(quotient-2))))++cehr_rate1* MIN((cehr_ceil2-cehr_ceil1)*(1+Married);MAX(tax_inc-cehr_ceil1*(1+Married);0))+cehr_rate2 * MAX(tax_inc-cehr_ceil2*(1+Married);0)
	Adjusted for decote	adj_tax	J	SI(Married;Positive(MINA(tax_sch; (1+decote_pente)*tax_sch- decote_pente*decote_mar));Positive(MINA(tax_sch;(1+decote_pente)*tax_sch-decote_pente*decote_sing)))
	Tax liable	inc_tax	J	(adj_tax>=tax_min)*adj_tax
	CSG+CRDS (non-deductible)	CSG_CRDS_noded	B	CSG_CRDS_rat_nod*((1-CSG_CRDS_abat)*MIN(earn;4*SSC_ceil)+Positive(earn-4*SSC_ceil))
	CSG deductible	CSG_ded	B	CSG_rat_ded*((1-CSG_CRDS_abat)*MIN(earn;4*SSC_ceil)+Positive(earn-4*SSC_ceil))
6.	Tax credits :	tax_cr	J	adj_tax*SI((tax_inc<=red_seuil_1*(1+Married)+red_seuil_dp*Children);red_taux;SI(tax_inc<='red_seuil_2*(1+Married)+red_seuil_dp*Children;(tax_inc*red_taux'/(red_seuil_1*(1+Married)+red_seuil_dp*Children-(red_seuil_2*(1+Married)+red_seuil_dp*Children)))+(red_taux*(red_seuil_2*(1+Married)+red_seuil_dp*Children))/(red_seuil_2*(1+Married)+red_seuil_dp*Children-(red_seuil_1*(1+Married)+red_seuil_dp*Children));0))
7.	CG tax	CG_tax	J	inc_tax+CSG_CRDS_noded+CSG_ded-tax_cr
8.	State and local taxes	local_tax	J	0
9.	Employees' soc security	SSC	B	((sickness_rate+pension_rate2)*earn + (pension_rate + pens_rate_ex )*MINA(earn;SSC_ceil) + unemp_rate*MINA(earn;4*SSC_ceil) + pens_rate_ex2* MAX(MIN(earn;8*SSC_ceil) - SSC_ceil;0))+SI(earn<SSC_ceil;0;SI(earn>8*SSC_ceil;8*SSC_ceil*pens_rate_ex3;pens_rate_ex3*earn))
11.	Cash transfers	cash_transf_gross	J	SI(Children<2;0;(CB_2+(Children-2)*CB_3)*SI(tax_inc<=(CB_c1+CB_ceiling_extra_child*(Children-2));1;SI(tax_inc<=(CB_c2+CB_ceiling_extra_child*(Children-2));0,5;0,25)))+SI(Isolated=1;CB_isol*Children;0)
		calculated_in_work_benefit_gross	J	MAX(SI((Isolated='1);' 12*pa_forf*(1+pa_maj_isol1+pa_maj_isol2*Children); 12*pa_forf*(1+SI(Married=1;pa_maj1;0)+pa_maj2*SI(Children<=2;Children;0)+pa_maj3*SI(Children>2;Children-2;0)))+pa_pct*(earn_dec-CSG_CRDS_noded)+pa_bonus*pa_forf/(pa_bonus2-pa_bonus1)*12*SI(ET(pa_bonus1*SMIC<(earn_dec_princ-CSG_CRDS_noded_princ);pa_bonus2*SMIC>(earn_dec_princ-CSG_CRDS_noded_princ));(earn_dec_princ-CSG_CRDS_noded_princ)/SMIC-pa_bonus1;0)+pa_bonus*pa_forf/(pa_bonus2-pa_bonus1)*12*SI(ET(pa_bonus1*SMIC<(earn_dec_spouse-CSG_CRDS_noded_spouse);pa_bonus2*SMIC>(earn_dec_spouse-CSG_CRDS_noded_spouse));(earn_dec_spouse-CSG_CRDS_noded_spouse)/SMIC-pa_bonus1;0)+pa_bonus*pa_forf*12*SI((earn_dec_princ-CSG_CRDS_noded_princ)>=pa_bonus2*SMIC;1;0)+pa_bonus*pa_forf*12*SI((earn_dec_spouse-CSG_CRDS_noded_spouse)>=pa_bonus2*SMIC;1;0)-MAX(earn_dec-CSG_CRDS_noded+(family_benefit_gross-SI(Isolated='1;CB_isol*Children;0)*(1-(22,5%'/28,15%)))+((Married+Children='0)*' pa_forf_logement1*pa_forf*12+ (Married+Children='1)*pa_forf_logement2*pa_forf*1,5*12' + (Married+Children>='2)*pa_forf_logement3*pa_forf*1,8*12);' SI(ET((Married='0);(Children>0));' 12*pa_forf*(1+pa_maj_isol1+pa_maj_isol2*Children);pa_forf*12*(1+SI(Married=1;pa_maj1;0)+pa_maj2*SI(Children<=2;Children;0)+pa_maj3*SI(Children>2;Children-2;0))));0)
		final_gross _in_work benefit_gross		SI(calculated_in_work_benefit_gross>pa_min; calculated_in_work_benefit_gross;0)
		crds_cash_transf	J	cash_transf_gross*-1*CRDS_special
		cash_transf_net	J	cash_transf_gross+crds_cash_transf
13.	Employer's soc security	SSC_empr_gross	B	(CSA + pens_empr2 + accidents_empr+others_empr)*earn + pens_empr1*MINA(earn;SSC_ceil) + pens_empr_ex*MINA(earn;SSC_ceil) + pens_empr_ex2* MAX(MIN(earn;8*SSC_ceil) - SSC_ceil;0) + unemp_empr*MIN(earn;4*SSC_ceil) +SI(earn<SSC_empr_SMIC2*SMIC; fam_empr_2*earn; fam_empr*earn)+SI(earn<SSC_ceil;0;SI(earn>8*SSC_ceil;8*SSC_ceil*pens_empr_ex3;pens_empr_ex3*earn))+SI(earn<SSC_empr_SMIC3*SMIC;sickness_empr*earn;sickness_empr2*earn)
		SSC_empr_reduction	B	IF(OR(earn>SSC_empr_SMIC_ref*SMIC,earn='0),0,-MIN' (SSC_empr_red_max*earn,(SSC_empr_red_max/SSC_empr_redrate2)*(SSC_empr_SMIC_ref*SMIC/earn-1)*earn)) -IF(earn<cice_max*SMIC;earn*cice_red)
		SSC_empr_final	B	SSC_empr_gross+SSC_empr_reduction

Key to range of equation B calculated separately for both principal earner and spouse P calculated for principal only (value taken as 0 for spouse calculation) J calculated once only on a joint basis.

Notes

Notes

← 1.  The social protection scheme is named ARRCO for non-managers and AGIRC for managers. The two protection schemes have been merged since the 1st January 2019.

← 2.  During at most 12 months over a 18-months period; or, if there is a child under three in the family, until the child is three.

← 3.  The boundaries are defined as: minimum of 59 hours paid at gross minimum wage per hour per month and maximum of 120 hours paid at gross minimum wage per hour per month.

← 4.  Capital income, unemployment benefits, pensions or minimum old-age pensions are not taken into account in this model.

← 5.  The complete formula uses the minimum of this lump sum tax and the amount of housing benefits, if the family is a tenant. As the model does not include housing benefits, we only use the lump sum in the formula. This method tends to minimize the amount of “prime d’activité” served.

← 6.  In the previous model, for 2015 revenues, this reform only affects the income tax (no PPE in 2016) but not the benefits, since the “prime d’activité” will be served as from the beginning of 2016.

← 7.  Discrepancies can be explained by differences of coverage. For instance, the INSEE average wage series excludes public administration workers from its scope while the OECD series includes them.