You might assume that UK National Insurance contributions are the equivalent of French social contributions but there are some fundamental differences. UK National Insurance contributions are very much a function of earnings, whether employed or self-employed. In France, they are much more widely applied which can come as a surprise to many; for example they are applied to pension income and investment income such as dividends and bank interest.
I will give an overview of the scope of French social contributions and describe briefly how you become liable for them.
French resident workers
First and foremost social contributions are generally due on any kind of work that you carry out in France. This falls into two main categories: employees and the self-employed.
Employees resident in France
Generally employees in France will pay social contributions on their remuneration (salary, bonuses, benefits in kind etc). Their employer will also have to pay employer contributions.
Examples of exceptions are:
- Employees posted to France on a temporary basis from a country which has a social security agreement with France (this applies to EU countries which for the moment includes the UK), allowing them to continue paying social security contributions in their country of origin.
- Cross-border workers who live in France but pay social security contributions in the country where they work (for example Belgium, Luxembourg and Switzerland).
- Those employed in more than one country; EU social security regulations for example may mean that they pay social security in a country other than France even though they normally live in France.
There are various social contributions covering for example health, accident at work, maternity, unemployment, death/disability and retirement. The calculation is quite complex in that each insured item has its own percentage(s), salary bands and may also depend on the total number of employees in the firm. Typically employee contributions are 20% – 25% of gross salary and employer contributions are typically 40% – 45% of gross salary. Very high salaries will have a lower percentage because most of the contributions are capped.
Self-employed resident in France
Self-employed workers in France are subject to social security contributions on their profits. Some employees are deemed to be self-employed for these purposes for example majority shareholder directors of companies. Similar exceptions to employees may also apply: temporary workers in France, cross-border workers and those working in more than one country.
Again the calculation is complicated but is typically 45% of profits. The exact percentage will depend on the actual profit.
If certain conditions are met, you may be able to register as an auto-entrepreneur, which is much simpler to operate than the normal social security regime for the self-employed. In this case the social security contributions are calculated based on turnover rather than the profit (percentages for 2019: 12.8% for those trading goods and 22.% for others, mainly service providers).
French resident UK retirees – pensions
In possession of S1 document
Retired British people who have relocated to France will normally have an S1 document which entitles them to French state health cover. With the S1 document, any treatment that you do not pay for is covered by the UK. A consequence of this is that you also do not have to pay French social security contributions on your pension income.
No S1 document – private health insurance
Early retirees from the UK can no longer obtain the S1 document. If they choose to go for private health insurance then they are not subject to the French compulsory state health cover; they also should not have to pay French social security contributions on their pension income.
No S1 document – French state health cover
It is possible to continue working (as an employee or self-employed) after reaching retirement age or to apply for French state health cover if you are settled in France. In these circumstances you are subject to the French compulsory state health cover and your pension income will be subject to French social security contributions. The current rate is 7.4% (and a reduced rate of 4.3% for low incomes).
Investment income and gains
Once you are resident in France you will be subject to French social charges on your worldwide investment income and gains (such as bank interest, dividends, rental income, capital gain on sale of investments and property). The current total rate of these social charges is 17.2%. This is in addition to French income tax that may be due.
If you are not resident in France you will still be subject to social charges on your French rental income and capital gains from French real estate property. You may be aware of the EU court ruling in 2015 that the French government could not apply social charges as widely as it thought. From 2018, the social charges for property income and gains are now applied as follows:
- 7.5% for those who pay their social security / national insurance contributions in another EU country.
- 17.2% for the rest
Effect of Brexit
Whilst the UK remains in the EU, it is subject to the EU social security regulations. This means for example that the S1 document mentioned above has effect for social security cover in France. What will happen in future depends on the post-Brexit arrangements which are to be agreed between UK and the remaining EU members.
This was an overview of French social security contributions; the detailed rules can be quite complex. If you would like clarity as regards your own situation and to avoid becoming liable for penalties in respect of none payment, do ensure your take professional advice relevant to your own circumstances.