French Tax Break for Domestic Help
Thursday 08 August 2019
A generous tax credit of 50% is available for domestic help in France.
One of the most useful and popular tax breaks available in France is for domestic (or home) help services.
The assistance is called 'crédit d’impôt emploi domicile' or 'crédit d’impôt services à la personne'.
Although a 'crédit d’impôt' , in practice, for those who pay little or no income tax in France, it is not a reduction in tax but a grant.
This is because if your eligible expenditure exceeds your income tax bill you will receive a refund from the tax office for the balance of the tax credit.
Thus, if your tax bill in the year would otherwise be €1,000, but the value of your tax credit is €2,000, you will pay nothing in tax and the tax office will reimburse you €1,000.
The tax credit is available to anyone who is tax resident in France, both retired and working households.
Working households can also opt for financial support for child-care under separate arrangements (Complément de libre choix du Mode Garde - CMG), but the two measures of support are not cumulative. In such cases the tax credit is calculated on the balance of costs after deduction of the CMG.
It is also available for both the principal residence and a holiday home in France, provided in the latter case you are tax resident in France.
Children who meet the costs of such a service provided to an elderly parent living in their own property are also eligible, provided the parent would be eligible for the benefit allocation personnalisée d'autonomie (APA). However, the children would lose entitlement to tax relief on other assistance they may provide.
The tasks that are eligible for the tax credit are widely defined, including:
- schooling tuition;
- household cleaning and related chores;
- preparation of meals;
- minor property repairs and maintenance;
- temporary security of home;
- IT support;
- secretarial and administrative support;
- help with bathing and dressing for the elderly or infirm;
- driving for elderly or infirm.
Where a young person is engaged as a 'au pair', the tax break also applies, provided the services provided fall within the list above.
Level of Tax Credit
The level of the tax credit is 50% up to a maximum level of expenditure, with a specific limit for certain tasks.
The maximum expenditure eligible for the tax credit is €12,000 pa per household (€15,000 in year 1).
Given the rate of the tax credit is 50%, this means that the maximum recurring tax credit is €6,000 pa.
Within the global limit there are specific limits on certain types of expenditure:
- €500 – property repairs and maintenance;
- €3,000 – IT support;
- €5,000 – gardening.
In relation to property maintenance and repairs (petit bricolage), these must be of an elementary and occasional nature that do not require the savoir-faire of a builder, and which can be realised in two hours maximum, a control which is also largely exercised by the financial limit imposed on eligible expenditure, although informal arrangements are more often than not made with the home help.
The global limits can be increased by €1,500 for other dependants in the household, up to a maximum of €18,000 in the first year, and €15,000 in subsequent years. ‘Dependants’ are either a child or other person over 65 years of age.
The maximum is also increased to €20,000 where a member of the household is disabled, but with no additional sum for dependants.
Provision of Services
In order to obtain the services you can either engage the person directly as the employer, or use an accredited service provider.
If you engage someone as an employee you are responsible for the legal and practical obligations that go with that relationship.
You can freely determine with your employee the terms of service, including the rate of pay, subject to compliance with minimum wage regulations, around €10 per hour. An employee also has a minimum paid leave entitlement.
You also have a liability for employer social security contributions, which are around 40% of the salary, although with partial exemption for those aged 70+ and those with a disability.
Where an employee works at least 8 hours a week then a formal employment contract is obligatory.
Finding a suitable employee and dealing with the formalities is unlikely to be an easy task, particularly in rural areas, although the use of the government employment agency Pole Emploi for recruitment is one route.
There also exists a service provided by URSSAF, the social security contributions collections agency, called Chèque Emploi Service Universel (CESU), through which the calculation and payment of the salary and employer social security contributions can be accomplished.
In addition to social security contributions, you also have an obligation under PAYE (prélèvement à la source) to deduct a sum for income tax.
Both you and your employee sign up with them and they deal with all the calculations and payments, although you can also pay direct. All you need to do is make a monthly declaration of the hours worked. They also offer guidance on the employment contract.
In order to use the service you need to create an account with CESU (Chèque Emploi-Service Universel). Your employee will also need to register on the site.
Another approach is to use an accredited body to undertake the recruitment and administration of a suitable employee, which they do in the capacity of 'mandataire'. These bodies may be public, private, or charitable, and an official list can be found at Annuaire Organismes Services a la Personne.
A charge is of course made for their services, and it does mean you may have less flexibility on the contractual arrangements.
Where domestic services are being provided to children, elderly or disabled persons, a third-party provider requires official accreditation/authorisation from the prefecture/departmental council as necessary.
Indeed, unless the provider has formally declared their activities with the local prefecture (whether or not accreditation/authorisation necessary), the client is unlikely to be able to benefit from the tax credit.
As an alternative to employing someone direct, it is possible to enter into a contract with an accredited provider who takes on the responsibility of provision of the service and employment of the individual, in the capacity as 'prestataire'.
These bodies are called organisme prestataire de services/organisme de services à la personne. They may be a private sector company, a public body or charitable organisation.
There are tax breaks available to such bodies, notably those concerning VAT and employer social security contributions, which may be reduced or exempt, thereby reducing the cost to the client.
The list of accredited providers can be found at Annuaire Organismes Services a la Personne by entering the service you seek and your post code.
As always with the engagement of a contractor, you should undertake due diligence on their record. Ensure, above all, where children, elderly or disabled persons are receiving the service that they are accredited/authorised as necessary, and that in all circumstances they are registered with the prefecture.
Obtaining the Tax Credit
Each year you will need to make a claim for the tax credit with your income tax return using form 2042 RICI. Both the CESU and your service provider will provide you with information that you need (attestation fiscale) to make such a demand.
Local Council Services
Separately from the tax credit, local councils also provide domiciliary care services (aide-ménagère à domicile) to elderly persons who have difficulty with managing at home, a service that is subject to individual assessment and a means-test. We will review this service at a later date.