The national currency is the Euro (EUR). In 2023, EUR 0.96 equalled USD 1. In that year, the average worker earned EUR 43 438 (Secretariat estimate).

The tax unit is aggregate family income, but children over 18 are included only if their parents claim them as dependants. Other persons may be fiscally attached on certain conditions: unlike spouses, who are always taxed jointly, children over 18 and other members of the household may opt to be taxed separately. Beginning with the taxation of 2004 income, the law provides for joint taxation of partners in a French civil union (pacte civil de solidarité, or PACS), as soon as the PACS is signed. Reporting obligations for “PACSed” partners are similar to those of married couples.

Earned income is reported net of compulsory employer and employee payroll deductions, except for 2.4 percentage points worth of CSG (contribution sociale généralisée) and the 0.5% CRDS (contribution pour le remboursement de la dette sociale), which are not deductible from the income tax base.

  • Work-related expenses, corresponding to actual amounts or a standard allowance of 10% of net pay (with a minimum of EUR 495 and a ceiling of EUR 14 171 per earner).

  • Family status: The “family quotient” (quotient familial) system takes a taxpayer’s marital status and family responsibilities into account. It involves dividing net taxable income into a certain number of shares [two shares for a married (or “PACSed”) couple, one share for a single person, one half-share for each dependent child, an additional share for the third and each subsequent dependent child, an additional half-share for single parent, and so on]: the total tax due is equal to the amount of tax corresponding to one share multiplied by the total number of shares. The tax benefit for a half-share is limited, however, to EUR 1 759 per half-share in excess of two shares for a couple, or one share for a single person, except for the first two half-shares granted for the first child of a single parent, in which case the maximum benefit is EUR 4 149.

There are compensatory allowances in case of divorce if paid in a lump sum (25% reduction, capped at EUR 30 500); home employment costs (child care, home help, housekeeper…) (50% reduction up to annual expenditure of EUR 12 000 with additional EUR 1 500 per dependent), child care costs for children under six (50% reduction, up to annual expenditure of EUR 2 300); dependent children attending secondary school or in higher education; donations to charities or other organisations assisting those in needs; trade union dues, etc. The exemption of the employer’s participation to the collective contracts of supplementary health cover is abolished in the budget act for 2014 (i.e., income earned in 2013).

A special rebate for taxpayers with a low tax liability is applied to the amount of tax resulting from the above schedule before reductions and tax credits. To be eligible, the tax on the household’s income must be less than EUR 1 928 for single households and less than 3 190 for couples. The rebate is equal to 45.25 % of the difference between this ceiling and the amount of tax before the rebate.

An exceptional contribution on high revenues is based on the reference taxable income (“revenu fiscal de référence”). The tax rates are 3% from EUR 250 000 to EUR 500 0000 (single person), 4% over EUR 500 0000 (single person), 3% from EUR 500 000 to EUR 1 000 000 (married couple or civil union) and 4% over EUR 1 000 000 (married couple or civil unions).

Local taxes levied on working households are:

  • Residency tax ("taxe d’habitation”) on secondary homes apply at rates set by local authorities.

  • Property taxes on developed and undeveloped land.

  • There are common rules for each type of tax, to which certain municipalities make certain adjustments.

These local taxes, the rates of which vary widely, depending on the municipality, are not assessed here.

The universal social contribution (CSG) was introduced on 1 February 1991. Since 1 January 2018, the rate of CSG has been 9.2%. This rate has been applied to a base of 98.25% as of 1st January 2012. The CSG is deductible against taxable income, but at a lower rate of 6.8%.

The contribution to the reimbursement of social debt has been in effect since 1 February 1997. Like the universal social contribution, its base has passed to 98.25% of gross pay as of 1st January 2012. The rate is set at 0.5%. Unlike social security contributions, CRDS payments are not deductible from taxable income.

Some contributions are levied on a capped portion of monthly earnings. Since 1997, this ceiling has been adjusted once a year on 1 January. The ceiling remained stable in 2020, 2021 and 2022 at EUR 3 428 (or EUR 41 136 per year). In January 2023, the ceiling is EUR 3 666 (or EUR 43 992 per year), corresponding to a 6.9% increase on the 2022 level.

  • 6.9% on earnings up to the ceiling (unchanged compared to 2022).

  • 0.4% on total earnings (unchanged compared to 2022).

  • 0.0% on total earnings (0.0% in 2021)

  • 0.0% on earnings since 1st October 2018.

  • Supplemental pension1 for non-managers and managers: minimum 3.15% up to the ceiling and 8.64% between one and eight times the ceiling.

  • The CEG (“Contribution d’Équilibre Général”) replaced AGFF and GMP in 2019. The rate of this contribution is, for non-managerial workers and managers, 0.86% of earnings up to the social security ceiling and 1.08% between one and eight times the ceiling.

  • The CET (“Contribution d’Équilibre Technique”): a contribution of 0.14% on total earnings up to eight times the ceiling, for employees who earnings exceed one time the ceiling.

8.55% (8.55% in 2022) of gross pay, up to the ceiling, plus a 1.90% (1.90% in 2022) levy on total pay.

13.0% of total earnings (after 13.0% in 2022). The rate has been reduced to 7.0% up to 2.5 times the minimum wage since 1st January 2019 with the conversion of the CICE into a permanent cut in social contributions.

An additional contribution of 0.3% (contribution de solidarité autonomie – CSA) is levied on total salary.

4.05% of earnings (4.05% in 2022) (4.5%, 5.5% or 7% for some temporary contracts), up to four times the ceiling; in addition, 0.15% (0.15% in 2022) up to four times the ceiling to endow the salary guarantee fund (AGS).

Contribution rates for work-related accidents vary by line of business and are published annually in the official gazette (Journal officiel de la République française). In 2023, the average rate is 2.24% (after 2.23% in 2022).

5.25% of total pay. The rate has been reduced to 3.45% up to 1.6 times the minimum wage from 2015 with the responsibility pact, up to 3.5 times the minimum wage from April 2016.

  • Supplemental pension: for non-managers and managers, 4.72% up to the ceiling and 12.95% between one and eight times the ceiling.

  • The CEG (“Contribution d’Équilibre Général”) contribution is 1.29% up to the ceiling, 1.62% between one and eight times the ceiling for managers and non-managers. In the table, this is combined with the rates for supplemental pensions.

  • The CET (“Contribution d’Équilibre Technique”), a contribution of 0.21% on total earnings up to eight times the ceiling for employees whose earnings exceed one time the ceiling.

  • Others (construction, housing, apprenticeship, further training): 2.646% of pay (for enterprises with more than 20 employees). The transport tax is not included because it varies geographically. Contributions to finance a fund dedicated to workers exposed to distressing work conditions (“Fonds Pénibilité”) vary with the levels of exposure of each worker and are therefore not included.

The reduction of employer-paid social insurance contributions, introduced in 1993, has been gradually extended and strengthened. As of 2022, it includes two types of measures:

  1. (i) The general reduction of employer-paid social insurance (ex-“Fillon Act”, also called today “zero contributions URSSAF”) is a decreasing reduction in social security contributions, which eliminates all common law social contributions paid at the minimum wage and whose level decreases with wage to become zero for a gross annual wage equal to 1.6 times the gross annual minimum wage. It applies irrespective of the number of hours worked for workers with contracts of at least three months. Since 1st of January 2023, the maximum reduction is 32.31% for companies with more than 50 employees. For companies with less than 50 employees, it is 31.91% since 1 January 2023.

  2. (ii) A proportional reduction in health insurance and family allowance contributions, which allow for a reduction of 6 and 1.8 percentage points respectively for gross annual wage below 2.5 and 3.5 times the gross annual minimum wage. The 6 percentage point’s reduction replaces since 1st January 2019 the competitive tax credit (CICE – crédit d’impôt pour la compétitivité et l’emploi), whereas the 1.8 percentage point reduction was introduced in 2015 by the Responsibility Act (Phase 1).

The gross annual minimum wage (for 1 820 hours) was changed once in 2023: it was at EUR 20 511 from January 1st 2023 and increased to EUR 20 966 from May 1st 2023.

The RSA (“Revenu de Solidarité Active”) is the minimum income benefit. However, the eight family types studied here earn too high an income to benefit from this benefit.

Family allowances: the monthly base for family allowances (BMAF) was equal to EUR 422.28 between January 1st and end of March 2023. It was automatically adjusted on 1 April 2023 to EUR 445.93.

  • The family allowances, granted to families with two or more children, are subject to revenue conditions since 1 July 2015, and adjusted every year:

    • Up to EUR 71 794 (+EUR 5 932 per child after the second child), the rate is 32% for two children and 41% per additional child. An extra amount of 16% of the BMAF is reversed if the child is over 14 years old (the extra amount is not incorporated into the model).

    • Between EUR 71 794 (+EUR 5 932 per child after the second child) and EUR 94 893 (+EUR 5 932 per child after the second child), the above rates are divided by 2.

    • Beyond EUR 94 893 (+EUR 5 932 per child after the second child), the above rates are divided by 4.

  • ASF (Allocation de Soutien Familial): extra child benefit for isolated parent is at most 42.20 % of the BMAF per month, against 28.13% in 2022. It is reduced by the amount of child support paid by the other parent to the family.

  • ARS (Allocation de Rentrée Scolaire): The amount payable depends on the age of the child to reflect needs. The allowance is payable to families or persons with children aged 6 to 18 attending school, and whose income is below a certain level (not incorporated into the model).

  • Family supplement (Complément Familial): 41.65% of the BMAF. Subject to revenue ceilings, this is paid to families as of the third child aged between 3 and 21. An extra amount (20.83% of BMAF) is reversed for families whose incomes are below a given threshold. The family supplement is not incorporated into the model.

  • Early childhood benefit (not incorporated in the model) known as PAJE (Prestation d’Accueil du Jeune Enfant): subject to revenue ceilings. It includes:

    • A birth grant of 229.75% of the BMAF received at the 2nd month following the birth.

    • A grant of 459.5% of the BMAF is received upon the adoption of a child.

    • A benefit (“allocation de base”) of 41.65% (or 20.825% depending on the family income) of the BMAF a month from the birth of the child until three years of age.

The housing benefits are not included in the model.

The November 2014 Supplementary Budget Act eliminated the earned income tax credit (Prime pour l’emploi, PPE) so that it could be merged with the in-work income supplement (RSA Activité) and become a single in-work benefit. The in-work benefit was created by the Act of 17 August 2015 on Labour-Management Dialogue and Employment, and has been in place since 1 January 2016. The in-work benefit is better targeted to promote a return to full-time work for low-paid workers. The benefit is not paid if its monthly amount is less than EUR 15.

The amount of in-work benefit is equal to a targeted income, less the maximum between resources and a lump sum. The lump sum (‘montant forfaitaire de la prime d’activité”) was equal to EUR 563.68 from 1 January 2023 to 1 April 2023, it then increased to EUR 595.25.

The targeted income is determined as the sum of three elements:

  • A lump sum (before CRDS) modulated according to the composition of the household. For instance, it is increased by 50% for couple, then 30% for each child until two and 40% for each additional child. The amount may be increased for a temporary period2 for an isolated parent (128.412% of the basic lump sum for the adult and then 42.804% for each child).

  • An individual bonus of 29.101% of the basic lump sum is planned for persons whose net income exceeds around 100% of the net minimum wage; this bonus grows linearly if the net income is between around 50% and 100% of the net minimum wage3.

  • 61% of the net professional income of the household.

Then resources are assessed as the sum of the household income, plus the benefits (family benefits and others, except RSA and housing benefits)4. A lump sum depending on the composition of the household (12% of the basic lump sum for a single person, 16% for a couple, 16.5% for three persons or plus) is used to take into account the housing benefits5.

  • Tax system (2020 income)

    • New tax schedule following the personal income tax reform (Budget Act 2020):

The Budget Act of 2020 (article 2) introduced a reform of the personal income system. The reform provides a significant lowering of income tax rate for an amount of around 5 billion euros. 16.9 million taxpayers are benefitting from this reduction from the 1st January, for an estimated average gain of around EUR 300. The changes are the following:

  • the marginal rate of 14% is reduced at 11%.

  • the tax rebate is reduced from three quarters to 45.25%.

  • the special 20% tax reduction rate is removed.

If the final tax is less than EUR 61, no tax is payable.

  • Increase of 1.7 points of CSG deductible (2018)

  • Social benefits regime

    • Increased reduction of employer-paid contributions for family allowance: 3.45% instead of 5.25% for salary up to 3.5 times the minimum wage from April 2016 (1.6 times before).

    • Removal of sickness and unemployment employee contribution

    • Creation of a new cash transfer benefit for low-income workers (“prime d’activité”) which replace the PPE and the “RSA activité”6.

Companies whose activity is slowed down or stopped due to the conflict in Ukraine can be eligible for the benefit of short-time work schemes (short-time work scheme under the common law “Activité partielle de droit commun” or the long-term job retention scheme “Activité partielle de longue durée” if an agreement of this type has been approved or validated before December 31, 2022). Companies strongly affected by the rise in gas or electricity prices can benefit from short-time work schemes by demonstrating that there is a link between the consequences of the conflict and the reduction of their activity. The coverage rates remain the same for all companies resorting to short-time work schemes ("employee" allowance of 60% and "employer" allowance of 36% of the employee's gross previous salary for short-time work scheme under the common law; "employee" allowance of 70% and "employer" allowance of 60% of the employee's gross previous salary for the long-term job retention scheme).

In August 2022, the French Parliament adopted the permanent raise of overtime pay exemption ceiling from EUR 5 000 to EUR 7 500 for income tax only, applicable from 2023 (tax on 2022 income).

The exceptional bonus scheme introduced in 2018 (“Prime Exceptionnelle de Pouvoir d’Achat”) was replaced in July 2022 by a permanent value-sharing bonus scheme (“Prime de Partage de la Valeur”) with new conditions for the transitory phase applying from July 2022 to end of 2023, before the permanent scheme takes place from 2024 onwards. Value-sharing bonuses from July 2022 can be paid with a limit of EUR 3 000 (EUR 6 000 in the case of the signature of a profit-sharing agreement). Under the transitory scheme, tax exemptions vary depending on the employee’s salary. For employees earning less than 3 times the minimum wage, the payment of a value-sharing bonus is exempt from employer’s and employee’s social charges, income tax and the additional employer social contribution (“forfait social”). For employees earning at least 3 times the minimum wage, the exemption from social charges does not cover the CSG and CRDS and ”forfait social” (20 %, only for companies with more than 250 employees), if applicable, while income tax must also be paid. A permanent scheme will be applicable from 2024 for all employees onwards with only an exemption of social security contributions while CSG/CRDS, income tax and “forfait social” will have to be paid. The value-sharing bonus scheme is not taken into account in the model as it is not mandatory for employers to use it.

To assess the degree of comparability between countries, the following additional information should be taken into account:

  • Coverage is of the private and semi-public sectors of NACE sections C to K up to 2007 and NACE rev.2 sections B to N from 2008.

  • The category “employees” encompasses all full-time dependent employees (excluding apprentices and interns).

  • The figures presented are obtained by applying income tax and social contribution scales to gross salaries as listed in annual social data reports (DADS) in NACE.

There is a break in the average wage time-series starting with the year 2016. That year, the National Statistics Office (INSEE) changed their methodology for the calculations of the average wage.

Additionally, the 2020 annual average wage decreased compared to previous years due to the exceptional use of Covid STW schemes in 2020. Indeed, Covid STW schemes led to the substitution of unemployment benefits to wages for workers benefitting from such schemes while contract duration includes periods of STW during which the contract is only suspended. Therefore, the annualised average wage which is computed as the ratio of wages to contract length that year declined by 3.7 % between 2019 and 2020. The OECD series of compensation per employee used as a proxy to forecast the 2023 average wage (2023 forecast is obtained by applying to the latest level published by Insee, which refers to year 2021, the evolution rates published by OECD for years 2022 and 2023) decreased as well in 2020 for the same reason, although to a slightly lesser extent: compensation per employee declined by 3.5 % in 2020 followed by a rebound in 2021 and 2022 by 4.9 % and 4.9 % respectively. The discrepancy between the variation in the INSEE series of average wage and the variation in the OECD series of compensation per employee in 2020 (i.e., 0.2 percentage point) can be regarded as standard compared to historical differences between these two times series7. Therefore, the usual methodology is kept unchanged: the 2023 average wage value is derived from the INSEE 2021 average wage level and evolutions in the OECD compensation per employee series in 2022 and 2023. No specific correction has been brought to forecast in order to take into account the difference between these two series for 2020 since this difference is not particularly important compared to what is observed in other years.

The equations for the French system are mostly calculated on a family basis. Variable names are defined in the table of parameters above, within the equations table, or are the standard variables “married” and “children”. A reference to a variable with the affix “_total” indicates the sum of the relevant variable values for the principal and spouse. And the affixes “_princ” and “_spouse” indicate the value for the principal and spouse, respectively. Equations for a single person are as shown for the principal, with “_spouse” values taken as 0.


← 1. The social protection scheme is named ARRCO for non-managers and AGIRC for managers. The two protection schemes have been merged since the 1st January 2019.

← 2. During at most 12 months over a 18-months period; or, if there is a child under three in the family, until the child is three.

← 3. The boundaries are defined as: minimum of 59 hours paid at gross minimum wage per hour per month and maximum of 120 hours paid at gross minimum wage per hour per month.

← 4. Capital income, unemployment benefits, pensions or minimum old-age pensions are not taken into account in this model.

← 5. The complete formula uses the minimum of this lump sum tax and the amount of housing benefits, if the family is a tenant. As the model does not include housing benefits, we only use the lump sum in the formula. This method tends to minimize the amount of “prime d’activité” served.

← 6. In the previous model, for 2015 revenues, this reform only affects the income tax (no PPE in 2016) but not the benefits, since the “prime d’activité” will be served as from the beginning of 2016.

← 7. Discrepancies can be explained by differences of coverage. For instance, the INSEE average wage series excludes public administration workers from its scope while the OECD series includes them.

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