Taxes in Europe Database v2
Articles 231 to 231 bis U and 1679, 1679A, 1679 bis of the General Tax Code (Code général des impôts).
In 2015, the sole beneficiary of the payroll tax is the social security. However, in previous years, the tax has sometimes been shared between the social security and the central authority.
The payroll tax is levied on employers who are not liable for VAT or who have not been liable for VAT on at least 90% of their turnover during the previous year.
The payroll tax is therefore payable by a limited number of employers; the main taxable entities are:
The payroll tax is levied on all gross remunerations (i.e. prior to the deduction of the employee's national insurance contribution), including benefits in kind. The taxe base has been broadened by the Finance Act for the social security administration (loi de financement de la sécurité sociale pour 2013) and now includes shares.
For employers who are partially liable for VAT, payroll tax is only payable in the ratio of turnover or revenue not subject to VAT (i.e. not warranting deduction of VAT, in other words, operations outside the scope of VAT or within the scope of VAT but exempted) to total turnover or revenue.
The State in respect of wages and salaries paid from the national budget; local authorities, with the exception of certain explicitly designated bodies; employers whose turnover or revenues do not exceed € 32,900 (services) or € 82,200 (purchase/resale).
The tax is not payable if its annual amount does not exceed € 1,200. When this amount exceeds € 1,200 but does not exceed € 2,040, a discount equal to three-quarters of the difference between € 2,040 and this amount is applicable.
Since January 1st, 2014, the payroll tax paid by associations is payable only for the portion of the amount exceeding a sum fixed at € 20,161 (this sum was fixed at € 6,002 before January 1st, 2014). Indeed, the Amending finance law 2012 aimed at reducing the payroll tax payed by small structures, such as associations : because of their non-profit nature, these organizations are normally not subject to corporation tax, and therefore could not benefit from the tax credit for competitiveness and employment" implemented in 2013. This measure has an estimated cost of € 300 million.
Taxable percentage of pay :
The highest rate (20 %) has been introduced in January 2013 (loi de financement de la sécurité sociale pour 2013).
Rates are lower in overseas departments.
The assessment of the payroll tax is liquided monthly, by quaterly down-payments, or by one payment (depending of the amount to pay).
The payroll tax has to be paid to the Tax General Directorate's accountant (comptable de la Direction Générale des Finances Publiques).