A new year generally means new provisions. In this newsletter, we round up the main changes that payroll departments will need to take into account to start the year on the right footing.
A decree dated 22 December 2020 maintains the social security ceiling for 2021 at the same level as 2020. Consequently, the monthly social security ceiling as of 1 January 2021 stands at €3,428, representing a yearly ceiling of €41,136.
The ceilings for the following reference periods therefore remain the same, as set out below:
The new hourly minimum wage has been raised to €10.25 as of 1 January 2021, and is set at €7.74 in Mayotte.
For an employee paid on a monthly basis and subject to the legal working time (35-hour week), the gross monthly minimum wage is set at €1,554.58 per month (versus €1,539.42 previously).
The increase in the minimum wage has an impact on:
The guaranteed minimum income remains unchanged at €3.65 as of 1 January 2021.
The Board of Directors of the Alsace-Moselle local health insurance scheme decided to maintain the contribution rate applicable to salaries, retirement benefits and other replacement income at 1.5% for 2021.
The 0.15% contribution to France’s wage guarantee scheme (AGS) remains unchanged as of 1 January 2021.
Since 1 January 2020, France’s URSSAF and CGSS networks have overseen the collection of additional health insurance contributions payable by employers in the electricity and gas industries. This covers the supplementary health insurance contribution, the solidarity contribution and the special contribution (cotisation d’équilibre) for pensions, which are changing as follows:
The yearly payroll tax rate schedule for 2021 has been adjusted as follows:
Until 31 December 2013, non-profit organisations, trade associations and member-unions, charitable foundations, religious congregations, state-approved associations and mutual insurance companies governed by the French Mutual Insurance Code (Code de la mutualité), with fewer than 30 employees, were granted a discount of €6,002 on the payroll tax amount normally due. On 1 January 2014, this discount was increased to €20,161 on the grounds that such organisations were ineligible for the competitiveness and employment tax credit (CICE) because they were not subject to corporation tax. As of 1 January 2021, despite the abolition of the CICE, the discount has been set at €21,086.
The 2021 Finance Act provides that employers which, owing to additions to their workforce, had 11 or more employees for the first time in 2018 or 2019, and in any event before 31 December 2019, remain subject to the professional training contribution at a rate of 0.55% for 2020 and the four following years. The five-year freeze on threshold effects provided for by French social security legislation applies to these employers from 1 January 2020 onwards.
This provision means that companies which had 11 or more employees for the first time in respect of their 2018 or 2019 professional training contributions can benefit from the new freeze on the threshold effect introduced by the PACTE law, rather than remaining subject to the previous progressive rate increase initially provided for.
To facilitate the resumption of the collection of these contributions, the 2021 Finance Act has amended a number of provisions, including:
An amendment dated 15 December 2020 has removed Article 3 from Appendix A to the National Interprofessional Agreement of 17 November 2017 (ANI), which stated that the contributions of employees on apprenticeships borne by the French government were limited to the standard rates for supplementary pension contributions, with any additional contributions payable as a result of the application of higher rates remaining payable by the employer.
The Social Security Department of the French Ministry of Solidarity and Health informed the AGIRC-ARRCO pension schemes that the proportion borne by the French government has been extended to cover all apprenticeship employee contributions, including those resulting from the application of rates higher than the standard rates.
The extension came into effect on 1 January 2021. Consequently, apprentices are exempt from supplementary pension contributions up to 79% of the minimum wage, even if they benefit from contribution rates that are higher than the standard rates.
A decree dated 28 December 2020 has set the new maximum values for the rate of the general reduction in charges and contributions for 2021. The T-rate to be taken into account in the calculation of the coefficient for the general reduction, also known as the Fillon reduction, has been modified as of 1 January 2021 as a result of an increase in the maximum contribution rate for accidents at work and occupational diseases (AT/MP) used to determine the T-rate. Consequently, the standard T-rate has increased from 0.3205 to 0.3206 for employers applying a 0.10% rate of contributions to the French national housing aid fund (FNAL), and from 0.3245 to 0.3246 for employers applying a 0.50% rate of contributions to the FNAL.
The decree applies to contributions on remuneration payable in respect of periods beginning on or after 1 January 2021.
Under the 2021 Social Security Finance Act, video and film production companies in French overseas territories can benefit from the Law for overseas economic development (LODEOM) exemption based on the enhanced competitiveness schedule. Accordingly, video and film production employers with fewer than 250 employees and annual revenue of less than €50 million will be totally exempt from paying employer contributions up to double the minimum wage as of 1 January 2021.
Certain exemption mechanisms based on geographic location were due to end on 31 December 2020. The 2021 Finance Act provides for the extension of the following mechanisms for a further two years, up to 31 December 2022:
The 2021 Social Security Finance Act provides for the exclusion of certain benefits in kind encouraging the practice of sports within businesses from the social security contribution base.
Accordingly, the following may be exempt from social security contributions:
The conditions and limits for exemption will be specified by decree at a later date.
When an employer provides accommodation, it may choose to value this benefit in kind based either on the rental value of the accommodation or on a monthly flat rate calculated based on the number of rooms and the employee's salary with reference to the monthly social security ceiling.
The value of the benefit in kind can be estimated based on the accommodation's rental value by referring to the registered rental value used as a basis to calculate the local residence tax, which is revised annually using a formula.
The actual amount of the associated costs (water, electricity, gas, heating and parking) paid by the employer are added to the accommodation's valuation.
The other expenses paid by the employer but which are usually incurred by the occupant such as the local residence tax or insurance cover constitute a cash benefit subject to contributions.
The 2021 rate schedule is as follows:
Value of the benefit in kind for accommodation with:
|Monthly salary||One main room||Several rooms|
|Less than €1,714||71,20 €||38,10 € per room|
|Greater than or equal to €1,714 and less than €2,056.80||83,20 €||53,40 € per room|
|Greater than or equal to €2,056.80 and less than €2,399.60||94,90 €||71,20 € per room|
|Greater than or equal to €2,399.60 and less than €3,085.20||106,70 €||88,90 € per room|
|Greater than or equal to €3,085.20 and less than €3,770.80||130,70 €||112,70 € per room|
|Greater than or equal to €3,770.80 and less than €4,456.40||154,30 €||136,20 € per room|
|Greater than or equal to €4,456.40 and less than €5,142||178,10 €||178,10 € per room|
|Greater than or equal to €5,142||201,70 €||189,80 € per room|
This rate schedule corresponds to a monthly valuation. The weekly valuation is equal to one quarter of the monthly amount rounded to the nearest ten cents.
These valuations cover complete weeks or months, regardless of the number of working days.
The flat rate of this benefit in kind is set at €4.95 per meal (€9.90 for one day with two meals) from 1 January 2021.
For employees taking their meals in a canteen, the employer contribution is not considered as a benefit in kind and is not included in the contribution base, provided that the employee contribution is at least equal to half of the flat rate per meal, i.e., €2.48 in 2021.
From 1 January 2021, the benefit in kind for meal allowances of employees working in these sectors remained unchanged at:
Executives were not eligible for the flat-rate valuation of meal allowance benefits in kind under Article 5 of the 10 December 2002 decree, which prohibited flat-rate valuations for company executives without an employment contract who are automatically registered with the French social security system. In the case of these executives, the valuation of the benefit in kind based on actual costs was the only option.
The use of flat-rate valuations was only permitted if the executive could provide proof of an employment contract giving them access to unemployment insurance.
Fixed allowances for business expenses are excluded from the social security contribution base if used for their intended purpose. This condition is deemed satisfied if the allowance amount does not exceed certain limits. They are adjusted on 1 January of each year. The new exemption limits apply to salaries and earnings paid from 1 January 2021, and relate to periods of employment from that date.
For travel in metropolitan France and when employees (or those with equivalent status) cannot return home every day, a fixed travel allowance is deemed used for its intended purpose for the portion that does not exceed:
For the first three months:
From the 3rd to the 24th month of travel:
From the 24th to the 72nd month of travel:
Costs incurred by employees when relocating for their job may be deducted from the social security contribution base under certain conditions.
Fixed allowances are deemed used for their intended purpose up to:
Regarding allowances provided to compensate for moving expenses incurred by the employee, the employer has to substantiate the expenses incurred.
The French mobility law published in the Official Journal of 26 December 2019 established the “sustainable mobility” flat-rate allowance, a new employee transport subsidy.
It allowed employers to refund, in part or in full, the cost of their employees’ transport expenses for commuting to and from work using the following means of transport:
The mileage allowance formerly available to employees who commute to and from work by bicycle was eliminated as it was included in the “sustainable mobility” flat-rate allowance.
Up to €400 per employee per year of employer refunds of transport expenses (sustainable mobility flat-rate, fuel costs or the cost of charging electric vehicles, and now plug-in hybrid and hydrogen vehicles) could be exempt from employee income tax, social security contributions and CSG/CRDS contributions. This amount has been increased to €500 per employee per year as of 1 January 2021.
Of the €500, fuel costs may not represent more than €200 per year (as previously) in order to promote “sustainable” mobility.
It is also specified that the refund of transport expenses incurred by employees will be in addition to the public transport contribution. However, the total exempt amount may not exceed €500 per year or the amount of the public transport contribution, if it is already greater than this amount.
A number of conditions must be met in order for the employers’ participation in the purchase of meal vouchers to be exempt, including that the participation does not exceed an amount which is, in principle, adjusted every year.
The method for reviewing this exemption limit has changed since 2020. It is no longer adjusted in proportion to the upper limit of the first bracket of the income tax scale. Instead, it is now adjusted in proportion to the change in the consumer price index (excluding tobacco) between 1 October of the second preceding year and 1 October of the preceding year of the year during which the meal vouchers were purchased, rounded, if applicable, to the nearest euro cent.
The change in the consumer price index (excluding tobacco) for all households combined between October 2019 (103.99) and October 2020 (103.75) was negative, leading, in principle, to a decrease in the exemption limit for the employers’ participation. The exemption limit for the employers’ participation should therefore have been €5.54 for meal vouchers purchased in 2021 (compared to €5.55 in 2020). However, the French government decided to maintain the same exemption threshold for meal vouchers in 2021 as in 2020.
Furthermore, the government has extended the validity period of 2020 meal vouchers, which would otherwise have expired on 31 January 2021, and relaxed the conditions for using them. They are now valid until 1 September 2021, with a spending limit of €38 per day in restaurants. However, the spending limit is maintained at €19 for the purchase of food products (prepared meals, fruit and vegetables, etc.) in supermarkets and small stores. Due to restaurant closures, the vouchers may also be used for “Click and Collect” purchases and deliveries.
Works council vouchers granted by Economic and Social Committees are exempt from contributions so long as their total value does not exceed 5% of the monthly social security ceiling per year and per beneficiary. Since the monthly social security ceiling has not been adjusted for 2021, this value remains unchanged at €171.40, rounded to €171. The amount was doubled for vouchers granted before 31 January 2021.
A mandatory minimum allowance is to be paid to interns undertaking an internship lasting more than two months, whether consecutive or not.
The minimum hourly amount of the allowance is set at 15% of the hourly social security ceiling. Furthermore, whether mandatory or not, the allowance paid is exempt from certain social security contributions up to a threshold also set at 15% of the hourly social security ceiling.
Since the hourly social security ceiling remained unchanged at €26 for 2021, the 15% value is equal to €3.90 per hour of internship in 2021 (€26 x 15%).
The thresholds for the wage attachment rate schedule have not been adjusted for 2021.
This is because these thresholds are reviewed on a yearly basis according to the change in the consumer price index (excluding tobacco) of urban households where the head of the household is a worker or employee, as set in August of the preceding year for all of France. Since the change in said consumer price index between August 2019 (103.88) and August 2020 (103.84) was negative, the thresholds applicable in 2021 remain unchanged from 2020.
Consequently, the 2020 schedule still applies.
The annual rate schedule was as follows at 1 January 2021:
Each bracket is increased by €1,490 per year per dependant of the debtor subject to attachment or the assignor (dependants qualifying for family allowances and a spouse, partner or ascendant whose personal income is below the active solidarity income [RSA]).
Each bracket is increased by €124.16 per month per dependant of the debtor subject to attachment or the assignor (dependants qualifying for family allowances and a spouse, partner or ascendant whose personal income is below the RSA).
In any case, the employee subject to the attachment must be left with an amount equal to the RSA for a single person. This amount corresponds to the portion of salary which cannot be attached, and which rose from €559.74 to €564.78 on 1 April 2020. It is expected to be adjusted on 1 April 2021.
The withholding of income tax at source modifies the attachable portion of an employee’s remuneration, since the attachable portion is calculated after deducting social security contributions and, since 1 January 2019, withheld income tax. Consequently, garnishments and attachments will now be applied to a lower amount than in previous years, i.e., the attachable portion of salary after income tax withheld.