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French Taxation

Increase in Social Charges Exemption Thresholds

Wednesday 03 February 2016

The income thresholds for exemption or reduction in social charges on pension income have been increased for 2016.

Retirement pensions in France are exempt from the normal range of social security contributions to which those in employment or business are liable.

Nevertheless, most pensions remain liable to the social charges, called the prélèvements sociaux,

Pensions that are exempt from these charges are those who are covered for health in France by a S1 certificate of entitlement and government service pensions. Some expats have also been able to get exemption on the basis of having a private health policy and no affiliation to the French health system, but the legal position is not self-evident.

More precisely, other pensions are liable to three of the social charges:

  • Contribution Sociale Généralisée (CSG)
  • Contribution pour le remboursement de la dette sociale (CRDS)
  • Cotisation de solidarité pour l’autonomie (CASA)

Below a certain income threshold pension income is either completely exempt from the charges or they are paid at a reduced rate.

The standard rate of CSG is 6.6%, whilst the lower rate is 3.8%. The rate of CRDS is 0.5%, with no lower rate applicable. CASA is at the single rate of 0.3%.

This gives a standard total rate of 7.4%, or a reduced rate of 4.3% (CASA is not charged on reduced rate).

One of the peculiarities of the tax method is that the reference year used for assessing your social charges is not the same as that used for income tax as it is based on your income (revenu fiscal de référence) two years previously.

Accordingly, in 2016 you will be assessed for social charges on your tax notice received in 2015, which was itself calculated on your 2014 income!

Complete exemption will apply in 2016 if your income in 2014 was:

  • Single Person - Less than €10,676
  • Couple - Less than €16,376

The reduced rate of 4.3% will apply where your income in 2014 was:

  • Single Person - Between €10,676 and €13,956
  • Couple - Between €16,376 and €21,408

Higher allowances apply in all cases if there are dependents in the household.

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