Getting Started in French Payroll Module 2. Presented by Denis Barnard

Transcription

1 Getting Started in French Payroll Module 2 Presented by Denis Barnard

2 Agenda Bonus payments Benefits In Kind Income Tax Profit sharing

3 Bonuses 3

4 The most common bonuses in France : Bonuses Seniority Bonus : To reward loyalty to the company, determined by industry-wide agreements and the formula is usually: Seniority bonus = Percentage x Basic Salary Sometimes the Basic Salary can be the one of the lowest rank of the industry and it can also be a lump sum This bonus is independent of the amount of work provided and therefore is not to be considered when calculating the SMIC

5 Bonuses Suite Assiduity bonus : This bonus rewards the efforts of the employee to avoid lateness and absences It can be paid monthly or quarterly for the previous month or quarter The assuiduity bonus in January will be earned during February for instance Constraint bonus: Proportional to the constraint (night shift, cold environment...) Usually paid monthly

6 Bonuses Suite Results bonus: Dependant of the industry-wide agreements Thirteenth month bonus : 1/12 of the yearly salary earned at the end of the year

7 Seniority Bonus Seniority Bonus Amount = Base * % Base = mini du seniority coefficient * monthly hourly average / hourly collectif Seniority Percentage: (issu de la table ANC) CBA = payable after 3 years. 1% per year until the 15th year: 3%, 6%, 9%, 12%, 15%

8 Bonuses Table Name of the Bonus Exceptional Bonus Seniority Bonus Assiduity Bonus Constraint Bonus Results Bonus or any Bonus with objectives or targets. Thirteenth month bonus. Subject to Contributions (FR : Cotisations)? Subject to Levies (FR : Contributio ns)? Subject to Taxes? To be accounted for Paid holidays base? To be accounted for Extra hours? Yes Yes Yes No No Yes Yes Yes Yes No Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes It depends No Yes Yes Yes No No

9 Benefits in Kind 9

10 Business Expense Management Employee-related expenses include expenses paid directly by the company to equip their employees (with mobile phones, etc.) and expenses reimbursed to the employees through expense reports Companies may reimburse their employees for business-related expenses The employees would provide an expense report substantiating the expense incurred The employer should keep the original report in order to be able to disclose them to the tax administration in case of tax audit or social audit

11 Business Expense Management The employer may want to reimburse these expenses to the employee via the payroll Moreover, the employer has a reporting obligation concerning the reimbursements he makes to his employees: at the end of the calendar year he has to report on the yearly declaration DADS to the French administration, the amount of expenses reimbursed to the employees during the year Whether they are directly paid by the company or reimbursed to the employees, employee-related expenses (or part of it) may be considered, in some cases, as fringe benefits and taxed with social contributions

12 Benefits In Kind According to French tax law, employee-related expense paid by the company that is not substantiated as a cost fully incurred on professional grounds, would be in fact a kind of additional salary for the employee, and therefore has to be considered as a fringe benefit Fringe benefits may exist when: the expense is a nonwage compensation provided to the employee (e.g. renting of the employee s flat, gift to the employee, etc. Specific exemptions may apply, - gift to employee has an annual cap per year and is only allowable for specific events)

13 Fringe benefits may exist when: Benefits In Kind the expense is excessive in comparison with normal way of business (such as spending on too many hotels or restaurants fares, etc. ) the expense is partly incurred for the employee s private use (payment of full phone bills whereas phones are partly used for personal use, etc ) the expense is not supported by necessary documentation (i.e. invoices with information detailing how the expenditure is business-related: a visa card receipt, for example, is not considered as sufficient documentation)

14 Benefits in Kind- Control If these taxation rules are not applied, then in a case of a tax audit or Social Security audit, the auditor may reassess: the social contributions due on the fringe benefit (employee s and employer s contributions) the personal income tax of the employee and possibly reject the deduction of the expenses in the company books (inducing increase of corporate tax)

15 Benefits in Kind- Control If, further to the tax audit, unpaid tax is claimed by the French administration: The company would be liable for both employer s and employee s payroll contributions But the company would not be responsible for the payment of employee s private income tax relating to the reassessment Some benefits granted to employees may not be considered as taxable given the circumstances (e.g. relocation expenses when an employee is moving house for a new job/position, or travel expenses when the employee works far away from his family, etc.)

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18 Income Tax 18

19 Income Tax Not deducted under PAYE! Tax based on family income Divided between each part of the family Every adult must make an annual return Tax paid in instalments on an estimate basis direct to tax Authority Employer only needs to provide key data for tax return via the employee payslip.

20 Category includes: French tax rates wages, salaries, compensation and emoluments received in consideration of an employment, including the remuneration of senior managers of joint-stock corporations (chairman of the board, chief executive officer, deputy CEOs and members of the management board) and managers of limited liability companies, allowances paid to members of the French and European Parliaments and, at the beneficiary's discretion, allowances paid to the holders of local elected offices;

21 French tax rates Deducting: mandatory social security contributions and, when the person is in active employment, expenses inherent in the function or job from the gross amount paid

22 French tax rates Unless otherwise provided, gross earned income includes all amounts and benefits in kind available to the taxpayer Expenses incurred in the acquisition of earned income are normally taken into consideration on a notional basis (a 10% deduction, capped and reviewed each year), however, taxpayers may opt to deduct the actual amount of their professional expenses, subject to the production of vouchers

23 French tax rates Pensions and annuities without consideration are eligible for 10% special relief, though the amount for all members of the household may not exceed an amount increased each year in the same proportion as the upper limit of the first band of income tax The authorities calculate personal income tax on the basis of the amounts declared by taxpayers, who are required to submit a single return per tax household reporting all income received in the previous year

24 French tax rates In addition, those receiving income from professional activities (business profits, non-commercial profits, agricultural profits), investment income, income from real property and capital gains on real property are required to attach special declarations to the overall return The calculation of income tax takes the taxpayer's personal situation into account

25 French tax rates The income tax calculation is adjusted to personal circumstances, inter alia, by means of an income splitting system and by allowing taxpayers tax reductions or credits for certain personal expenses Income splitting is a way of taking dependents into account and, accordingly, to cushion the effects of progressive taxation by applying the progressive rate to a partial income, namely taxable income per part

26 French tax rates The method involves dividing the tax household's taxable income into a certain number of parts (e.g. one part for a single person, two parts for a married couple, an additional half-part for each of the first two dependent children and an additional part for each dependent child thereafter) The progressive tax scale is then applied to the taxable income per part

27 French tax rates Tax bracket Rate Up to % From to % From to % From to % From %

28 Payment of Tax French taxpayers have options for payment: Can either be paid in 10 monthly instalments Or by three tranches throughout the year Tax returns for 2015 are due for submission sometime between April and June, Depending on whether they are paper or internet returns. Dates have yet to be confirmed

29 Profit Sharing

30 2 Types French Profit Sharing Profit-sharing agreement (accord de participation aux résultats) A type of agreement The global fund for this type of agreement is dependent on company profits Worker's participation agreement (accord d'intéressement des salariés) A type of agreement The global fund for this type of agreement is dependent on achieving objectives that are defined in the agreement Agreement definition = define all the rules relating to the agreement, including eligibility criteria, calculations for computing the global fund and sharing it between employees, and the investment methods available. Calculations are based on company results and payroll information over a period known as a reference period. You create one or more reference periods for each agreement, depending on the duration of the agreement

31 French Profit Sharing Process & System The Manage French Profit Sharing business process in Human Resources is for French customers who need to manage their profit-sharing and worker's participation agreements: Ability to define agreements and link the agreement document, giving online access to agreement definitions Automatic calculation of global funds and each employee's personal fund Compensation administrators can review and adjust the results of the calculation at every stage and approve fund release and track fund transfer

32 French Profit Sharing Process & System Online access for employees to view agreement and fund information Employees can also update their investment settings and request release of funds Integrating Human Resources with Global Payroll for France enables you to automatically process payments for profit-sharing and worker's participation funds Workflow provides automatic notification of profit sharing events for employees and compensation administrators Reports provide details of employees' profit-sharing funds

33 Profit-sharing agreement (accord de participation aux résultats). 1. Eligibility list 2. To be checked by benefits 3. Finance to give the amount per companies (SIREN) to the TPV. 4. TPV (crédit agricole, SG, Axa, BNP, Natixis ) to calculate the amount per employee and send the letter with the options 5. TPV to give a listing to payroll French Profit Sharing Process & System

34 Employees may under certain circumstances be able to use their CET account and convert all (or part) into either cash or as a cash contribution to either their PEE/PERCO plan Worker's participation agreement (accord d'intéressement des salariés). Eligibility is normally X months seniority Calculation reference period = 01/01/n to 31/12/n Computed through Excel and send to payroll The 31/03/year n+1, employee has the option to get this amount through payroll (payroll amount taxable according specific rules - CSG CRDS) Second option put it on a company plan PEE French Profit Sharing Process & System J&J

35 French Profit Sharing Process & System J&J Worker's participation agreement (accord d'intéressement des salariés) managed through payroll amount send by interface from Excel - or computed through Excel and send to payroll The employees have the option to get this amount through payroll or put it on a company plan to save the money - the 31/03/year n+1 (on payroll amount taxable according specific rules - CSG CRDS)

36 French Profit Sharing Process & System J&J CSG = Contribution Sociale Généralisée and CRDS = Contribution au Remboursement de la Dette Sociale Basically new taxes introduced to pay off the "trou de la Sécu", the gaping hole in the finances of the social security system, because generations of nanny-stating have produced people who don't know where to start finding a job, don't want to find a job, and expect the state to pay for all their health requirements, including thermal underwear, toothbrushes, and taxis to go and see the doctor Read on at

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