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pointerFinance & Taxation
Personal Taxation in France
1. Overview
2. Top Tips
3. Income Tax Liability
4. Income Tax Return
5. Calculating Income Tax Liability
6. Payment of Income Tax
7. Social Security Contributions
8. Taxation of Investment Income
9. Local Property Taxes
10. French Wealth Tax
11. Capital Gains Tax
12. Gifts Tax
13. Tax Inspection
14. Tax Complaints
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7. Social Security Contributions in France

  1. 7.1. Basic Rules
    7.2. Employers and Employees
    7.3. Self-Employed
    7.4. Retired Persons
    7.5. Early Retirees
    7.6. Social Charges (CSG/CRDS)

7.1. Basic Rules

In contrast to most European countries, where the social security system is financed through general taxation, the system in France is funded through social security contributions.

You will find that if you are either an employer, employee or self-employed, the level of social security contributions is high, indeed, one of the highest in the world.

However, if you have reached the age of retirement, and you are from the EEA, you escape payment of these contributions on your pension. Those from the USA also benefit from relief on social charges.

One important distinction from practice in the UK and many other countries is that, with minor exception, social security contributions paid by business owners are tax deductible, in whole or in part (although it does depend on your tax regime).

Accordingly, income tax is charged after most social security contributions have been deducted.

The system is also complicated by the fact that in France the distinction between taxation and social security contributions is not clear-cut.

In particular, certain social charges (called contributions sociales or prélèvements sociaux) are ostensibly a payment into the social security system, but are viewed by most people as part of the system of general taxation. Some of these social charges are also tax deductible.

Neither is there a single national insurance charge in France, in the same way as is the case in the United Kingdom. There are different charges for each of the benefits, e.g. family benefits, pensions, health.

In the following pages we review the rules as they affect different groups of persons, with a particular section on the complicated rules governing liability to the social charges.

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Next: Liability of Employers and Employees

Back: Payment of French Income Tax

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