Getting Started in French Payroll Module 4. Presented by Denis Barnard

Transcription

1 Getting Started in French Payroll Module 4 Presented by Denis Barnard

2 Agenda Social Security

3 Social

4 Social Security Organization of the French social welfare (Sécurité sociale). There are 5 sectors (branches) since the ordinnance of 1967 : Sickness sector Work accidents and professionnal diseases sector Family benefits sector Elderly and pensions sector Collection sector (Acoss) : This branch is in charge of the treasury.. Remember it well as we will refer to this one often

5 Contributions & Levies Contributions and levies are tools used by the French government in order to finance the social and welfare policies Unlike most other countries, the collected contributions and levies are immediately used for pensions and welfare benefits There are no organisations in charge of investing the collected funds as found in the UK or the USA Obviously this system is dependant on economical results, rate of unemployement and the proportion between the active part of the population and the pensioners

6 Contributions & Levies Source:

7 Contributions & Levies Source:

8 Cotisation & Levy Some clarification before proceeding : In France what is called «Cotisation» is a contribution: The employee and employer are contributing to an organisation and by doing so, gives the employee rights and benefits from the organisation The «Contribution» is a levy : The employee and employer are also being deducted, but it does not give any rights or benefits

9 Cotisation & Levy The majority of the contributions and levies have no limit or cap based on the gross salary: when calculating the contribution or levy the whole gross salary is taken into account But in certain cases only part of this gross salary is used to determine the amount to be deducted This is the «Plafond de la sécurité sociale» (Social welfare cap)

10 URSSAF URSSAF - Union de Recouvrement des cotisations de Sécurité Sociale et d'allocation Familiales (Set of agencies responsible for collecting social security and family allowance contributions) URSSAF are regular contributions paid by both the payee and employer to cover retirement, sickness, workplace accidents, family benefits, widows benefits, and FNAL (Housing Benefit) Most URSSAF contributions are calculated as a percentage of a funding base (calculation rule = percentage x base) In some cases, contributions may apply to a reduced base, and some contribution classes may qualify for reduced rates or exemption from paying contributions

11 Unemployment - Pole Emploi / Ex ASSEDIC Contributions URSSAF Pole Emploi (or GARP in Paris) contributions are paid to the state unemployment fund (UNEDIC), which finances unemployment insurance (Régime d Assurance Chomage or RAC) and salary guarantees (Fond National de Garantie des Salaires or FNGS) You may enter and maintain Pole Emploi contribution rates, create regulatory reports, make payments to collector institutions, and create certificates upon employee termination

12 ARRCO & AGIRC Both the ARRCO and AGIRC manage pension funds Each comprises employer and payee contributions. Most payees, except for apprentices and trainees, for example, are liable for contributions to ARRCO or AGIRC funds Because contributions paid to the Association Pour l'emploi des Cadres (APEC) are first paid to AGIRC and then paid to APEC, they are managed with the other AGIRC contributions These include lump sum APEC contributions and the APEC contribution base

13 ARRCO & AGIRC ARRCO, AGIRC, and Contingency Funds ARRCO, AGIRC, are contingency contributions for managing pension and contingency funds ARRCO Tranche A for managers and Tranche A and B for non managers AGIRC Tranche B and C for managers

14 Social Welfare Social welfare cap : Is set by the Acoss every year and for every working time frequencies from the hour to the quarter (even though most of the workers in France are being paid monthly) Currently the monthly limit is 3218 (gross salary) If a gross salary is over this limit, some contributions and levies ignore anything above this limit In some cases (Employee is entering or leaving the company, part-time employees and employee with multiple employers) this cap has to be pro-rated

15 Social Welfare Downscaling the social welfare cap : If employee joins or leave the company : Rule of the 1/30 th AND the employee is paid monthly (for the exemple on the next slide) The monthly social security welfare is divided by thirty and multiplied by the number of calendar days of presence of the employee

16 Social Welfare Downscaling the social welfare cap : If an employee is leaving the 18 th of July the cap will be: 18 x (1/30) x 3218 for the purpose of calculating the amount of the levy or contribution One of the most common errors of a payroll officer is if the employee leaves on Friday 18 th, that the weekend is not worked in the company and the employee starts a new job on Monday, Then the cap will not be 28x (1/30) x 3218 but just 3170 as there are no unworked days

17 Part Time Employee The cap is determined by this formula : (Social Welfare Cap x Part time gross salary) / Theoretical Full time gross salary 3 exclusive conditions of the rule : Employee must not be short time working Employee must not contribute at reduced rates Employee must not have multiple employers

18 Multiple Employer Multiple employer social welfare cap : In the event of an employee working for more than an employer, the formula is the following: (Gross salary at the company the employee is working at x Social welfare cap ) / Total gross salaries of all the employers Therefore it is crucial to ask all new hired employees if they have a second employer or not and ask then to report to you if he/she intends to have as not mentioning would not be beneficial to the employee

19 ACOSS The Acoss is managing the treasury but the collection is organised by a different organization the URSSAF (Union de recouvrement de la sécurité sociale et des allocations familiales) There are several URSSAFs which collect most contributions and levies The first contribution is the one for the risk sickness / maternity / invalidity / death

20 ACOSS Employer rate is currently 12.80% of the Gross salary Employee part is 0.75% of the Gross salary. If the employer is located in the departement of Moselle, Haut-Rhinand Bas-Rhin the Employee part is increased by 1.50% (2.25% in total)

21 Elderly Contribution For the part of the gross salary under the social welfare cap: Employer : 8.45% of gross salary Employee : 6.80% of gross salary For the part over the cap : Employer : 1.60% of gross salary Employee : 0.10% of gross salary

22 Elderly Contribution Autonomy and solidarity levy : Employer : 0.3% of total remuneration The total remuneration for this tax can only be determined by the CARSAT (Caisse d'assurance retraite et de la santé au travail) It is based on several factors with the company size being the main one

23 Other Contributions Contribution to family welfare benefits: Employer : 5.40% of Gross salary. FNAL contribution (housing aid contribution): Employer : 0.10% of all Gross salaries of the company (limited by the social welfare cap) If company has more than 9 employees : 0.40% of all the company gross salaries. For this calculation the staff number is the one of the 31 st of December of the previous year Social Fee FORFAIT SOCIAL Employer : 20% of all social contributions and levies of the employer All the complementary payments are 8% (Apart from the payments to PEEs and PERCOs)

24 Specific Levies Levies are deductions that don t fall into obvious categories, such as URSSAF, POLE EMPLOI, or AGIRC Levies are paid to several organizations with different funding bases, with different conditions, and on different dates They cover things like training, transport, apprenticeships, CSG and CRDS contributions, and the Levy on Salaries Some of these levies are often grouped under the heading Other Employers Deductions on the payslip

25 Specific Levies Professional Training Employers must allocate a percentage of their total payroll to professional training The levy rates vary depending on whether the employer has fewer than 10 payees or not There is a specific contribution paid by organisations that have contractual employees The funding base for this levy is gross salary Levy rates vary depending on whether the employer has fewer than 10 payees or whether the employer has contractual payees

26 Specific Levies Participation of the Construction Effort Applies to employers with 10 or more payees, and the funding base is gross salary It is paid to a registered collector organization, or the employer manages it. The levy is paid at the end of the year and is based on salaries paid during the previous 12 months. Apprenticeship The funding base of this levy is gross salary The rate of this levy is based on region (Alsace-Moselle or other regions) and is paid to the tax office The postal code of the establishment is used to determine which rate must be applied.

27 CSG The general social security contribution, which came into force on 1 February 1991, is a levy with a social purpose Unlike social security contributions, which entitle those who pay them to benefits, the CSG is levied like any other tax without any direct benefit in return The CSG is allocated to the social security budget, and specifically to the national family allowance fund, the old-age solidarity fund and compulsory health insurance schemes

28 CSG The contribution is levied on individuals who are domiciled in France for tax purposes and, where earned or substitution income is concerned, members of a French compulsory health insurance scheme The CSG tax base is very wide, since it is levied in principle on earned income, substitution income, income from personal assets and income from investments in fixed-income securities subject to withholding tax or exempt from income tax

29 The CRDS, which came into force on 1 February 1996, is intended to clear the deficits of the social security system It is also paid into the Social Security Debt Redemption Fund (Caissed'amortissement de la dette sociale, Cades) Like the CSG, it is payable by individuals who are domiciled in France for tax purposes and, where earned or substitution income is concerned, who contribute in any capacity whatsoever to a French compulsory health insurance scheme The rate is 0.5% CRDS

30 CRDS The tax base is slightly wider than that of the CSG since certain categories of income exempt from the CSG, such as family allowances and housing benefits are liable to the CRDS The CRDS is collected in the same way as the CSG, with the exception of the contribution on earned and substitution income from foreign sources collected by individual assessment The CRDS is not deductible from the income tax base

31 CSG CRDS These levies are separated into 3 parts by URSSAFs and ACOSS for the management of the funds: Taxable CSG: 5.10% Non taxable CSG: 2.40% Non taxable CRDS: 0.50% All these are employee's part only They have one thing in common, they are based on 98.25% of gross salary + employer's part of special industry-wide regime

32 Fillon Discount Named after President Nicolas Sarkozy's prime minister this measure was made to encourag employment and hiring It reduces the employer's part of social contributions and levies For the companies with less than 20 employees : Fillon discount = (0.281/0.6) x [(1.6 x Yearly minimum wages 1) / Yearly gross remuneration] For companies with 20 employees and over : Fillon discount = (0.26/0.6) x [(1.6 x Yearly minimum wages 1) / Yearly gross remuneration] The results are rounded to 4 decimal places

33 Unemployment Contribution For non-management : Employee part Employer part Total SS tranche A 3.0% 4.5% 7.5% SS tranche B 8.0% 12.0% 20% For cadres : Employee part Employer part Total SS tranche A 3.0% 4.5% 7.5% SS tranche B 7.70% 12.60% 20.30% SS tranche C 7.70% 12.60% 20.30%

34 Contributions Payments (reporting is done via DSN) are made via Web, Net entreprise website for 1. POLE EMPLOI contributions are paid to the state unemployment fund (UNEDIC), which finances unemployment insurance (Régime d Assurance Chômage (RAC)) and salary guarantee Fond National de Garantie des Salaires (FNGS) 2. AGIRC/ARRCO (Both the ARRCO and AGIRC manage pension funds) 3. URSSAF website Contributions Payment for URSSAF contributions retirement, sickness, workplace accidents, family benefits, widows benefits

35 Scope of Mandatory Social Protection in France

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