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French Social Charges in 2018

Social charges have been increased this year, but they remain partially tax deductible and there are a number of exemptions.

The social charges in France are called the prélèvements sociaux, and form part of the general body of social security contributions (cotisations sociales).

However, unlike the cotisations sociales almost all sources of personal income and capital gains are liable to the prélèvements sociaux.

Since 2018 (for 2017 income onwards) savings, dividends and capital gains on shares are subject to a flat tax of 30%, a composite figure which includes social charges. Nevertheless, it remains possible to opt out of the tax and to be assessed for income tax and social charges in the normal manner.

As can be seen from the table below the social charges actually comprise 5 different taxes, not all of which apply to all income, and in the case of CSG apply at different rates for different income.

Social Charges 2018
Tax
Salaries/Business
Pensions
Investment/Rents/Capital Gains
CSG9.2%
8.3%/3.8%*9.9%
CRDS0.5%
0.5%0.5%
Prélèvement Social0%
0%
4.5%
Contribution Additionnelle/
Cotisation l’autonomie
0%
0.3%
0.3%
Prélèvement de Solidarité0%
0%
2.0%
Total
9.7%
9.1%/3.8%*
I7.2%

*A reduced rate applies provided your taxable income is no greater than €14,404 for a single person and €22,096 for a couple (2016 income for 2018 assessment). Neither in such circumstances is the 0.3% Cotisation de solidarité pour l’autonomie payable.

The social charge CSG is partially deductible for income tax purposes, although this deduction does not apply in the case of savings and investment income unless you opt out of the flat tax. In 2018 the deduction is:

  • 6.8% on salaries;
  • 5.9% on pensions;
  • 6.8% on unfurnished rental income, investment and business income;
  • 3.8% for other income.

Exempted Income

All pension income is ordinarily liable to social charges on net taxable income, although the pension income of certain groups of persons is exempt.

The main exemptions are:

  • Those who hold an 'E' form or S1 health certificate;
  • Government service pensions (teaching profession, local government, civil service, armed forces);
  • Those whose health insurance cover is provided entirely through a private policy;
  • Those whose total net taxable income is below a maximum threshold, which is (broadly) €11,000 for a single person and €17,000 for a couple. The income reference year for this exemption in 2018 is your taxable income in 2016, as shown on your tax notice for 2017. Those who do not have a tax record in France going back this far should discuss their circumstances with their local tax office.

All such persons are entitled to 100% relief against the social charges on their pension income, although in the case of those on a government service pension other pension income remains liable unless exempt under the other provisions eg, S1, low income.

These exemptions do not apply to rental income or income from dividends or savings.

Nevertheless, only domestic rents are liable for these charges, for rental income from the UK (and most other countries) is taxable in the UK, with elimination of the social charges applied through a 100% tax credit (crédit d’impôt).

Non-residents are liable for the social charges on their French sourced income, such as rents and investment income. The flat-tax rules apply on investment income, in the same manner as for residents.

Related Reading:

This article was featured in our Newsletter dated 07/03/2018




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