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French Taxation

Increase in Social Charges Exemption Thresholds

Friday 06 January 2017

The income thresholds for exemption or reduction in social charges on pension income have been increased for 2017.

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, which are collectively called either the prélèvements sociaux or cotisations sociales.

Those that are exempt are:

  • Individuals who are covered for health in France by a S1 certificate of entitlement;
  • Government service pensions;
  • The pension income of those with private health insurance.

Other pensions are liable to two of the social charges:

  • Contribution Sociale Généralisée (CSG)
  • Contribution pour le remboursement de la dette sociale (CRDS)
  • Contribution 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 0.3% but not payable on the lower rate.

This gives a standard total rate of 7.4%, or a reduced rate of 4.3%.

The social charges are deductible against income tax, at the rate of 4.2% in the case of pension income.

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 taxable income (revenu fiscal de référence) two years previously.

Accordingly, in 2017 you will be assessed for social charges on your tax notice received in 2016, which was itself calculated on your 2015 income!

Complete exemption on pension income will apply in 2017 if your total net income in 2015 was:

  • Single Person - No higher than €10,996
  • Couple - Less than €16,868

The reduced rate of 4.3% will apply where your income in 2015 was:

  • Single Person - Between €10,997 and €14,375
  • Couple - Between €16,869 and €22,051

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

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