The French Social Security System Introduction

2018

This overview will only deal with the general scheme, the unemployment insurance scheme and the supplementary pension schemes which cover all private-sector salaried workers.

Organizational structure

The general scheme is managed by a network of local, regional and national institutions organized by risk and administered by representatives of employers and employees under the supervision of the different ministries in charge of social security (the Ministry for Solidarity and Health and the Ministry of Economy and Finance).

Financing

Approximately 80% of the general scheme’s total revenue comes from contributions and taxes deducted from earnings (please refer to the detailed rate.).

Source : Key social security figures 2016 (p.7)

Contributions are calculated on the basis of percentage rates decided at the national level and are borne partly by employers and partly by employees.

Earmarked taxes (“Impôts et taxes affectés”/ ITAF) are mandatory withholdings that are explicitly earmarked for social security financing. These include the General Social Contribution (“Cotisation Sociale Généralisée”/ CSG) which alone amounts to more than half of all ITAF.

The 2018 Social Security financing law includes a 1.7% increase in CSG on employment income, retirement pensions, property income, and investment income. This increase does not apply to unemployment benefits or to daily Social Security benefits.

The General Social Contribution ( "Contribution Sociale Généralisée" /CSG) and the Social Debt Repayment Contribution (“Contribution pour le Remboursement de la Dette Sociale/ CRDS) are paid on employment income, replacement income, property income, investment income and gambling income. All persons treated as residents of France for income tax purposes and subject to a French compulsory health insurance scheme are liable to CRDS (0.5%) and to CSG at the following rates:

  • 9.2% on employment income,
  • 6.2% on replacement income (daily sickness benefits or unemployment benefits)

If these persons are drawing a French pension, they are either exempted from or liable to CSG, CRDS and/or Casa ("Contribution Additionnelle de Solidarité pour l'Autonomie", Additional Solidarity Contribution for Autonomy) depending on their reference taxable income.

Reference taxable income for 2016
and income tax assessment for 2017
(for a single tax unit)
Deduction rate
11,018 € or less No deductions
Between 11,019 € and 14,404 € CSG : 3.8%
CRDS : 0.5%
14,404 € and up CSG : 8.3%
CRDS : 0.5%
CASA : 0.3%

In addition, a 1% health insurance contribution withholding is also applied to both compulsory and non-compulsory supplementary pension schemes.

However, persons subject to the compulsory health insurance scheme who are not treated as residents of France for income tax purposes are liable to employees' health insurance contributions at a rate of 5.5 %1 on employment income.

Persons in receipt of a retirement pension who are not treated as residents of France for tax purposes but subject to a compulsory health insurance scheme are liable to a 3.2% tax on their basic pension and a 4.2 % tax on their compulsory and voluntary supplementary pensions under the general scheme.

1 - The elimination of the employee’s health insurance contribution under the social security financing law for 2018 does not apply to non residents.

Scope and coverage

The compulsory general scheme covers wage earners in the private industrial, trade, and service sectors.

It is organized into five branches:

Two criteria must be met for compulsory membership in the general scheme:

  • the payment of any type of compensation on which contributions must be paid,
  • the existence of a link of subordination between the worker and one or more employers.

There is also an unemployment insurance scheme, which covers all employees subject to the general and agricultural schemes.

In France, all employers hiring an employee are first required to file a pre-employment declaration (“déclaration préalable à l’embauche”/ DPAE) with the relevant institution in charge of collecting social security contributions (URSSAF). The declaration enables registration for social security purposes of employees without a Social Security Number, as well as registration for unemployment insurance purposes. For supplementary pension schemes, employees are registered with the scheme to which their employer belongs which will depend on the company's location or field of activity.

The URSSAF agencies collect and distribute Social Security contributions. They finance the reimbursement of medical care, medical leave, maternity, and industrial accident benefits, and fund basic pensions and family benefits for those covered by the general Social Security scheme.

More information on the collection of contributions is available on the ACOSS website.

When an employer with a head office in another country and no place of business in France hires an employee in France to work in that country, that employer is required to report the hire and pay Social Security contributions in France to:

  • l'URSSAF Alsace (Centre national des firmes étrangères – CNFE)
    16 rue Contades
    67300 Schiltigheim
    Tel. : 0033 (0)810 09 26 33 (France and abroad)
    Fax. : 0033 (0)3 69 32 30 08 (France and abroad)
    email: cnfe.strasbourg@urssaf.fr
    https://www.cnfe-urssaf.eu/

For supplementary pensions, the relevant organization is:

  • Humanis
    CRE-Ircafex
    21 rue Roger Salengro
    94137 Fontenay sous Bois Cedex
    Tel : + 33 (0)1 58 82 72 12
    email: international@humanis.com
    humanis.com

For more information for businesses based outside France.