France — Exemption from statutory retirement contributions for new inbounds (« Opt-out » regime)

Cet article a été rédigé exclusivement en anglais afin d’être diffusé plus simplement auprès des populations concernées.

It is now possible for employees impatriated to France to be exempt from French retirement contributions, even if they are affiliated to the French social security system. The “Opt-out” regime provided by the PACTE law allows employees hired in France (or assigned to France) from abroad to benefit a temporary exemption from statutory French retirement contributions up to six years. The application decree was released on June 18th 2019.

What is the opt-out?

Foreign employees hired in France (or assigned to France) from abroad since July 11, 2018 can benefit from the exemption of statutory contributions to the French basic old-age retirement and complementary retirement schemes for a period up to six years (a first period of three years renewable once for +3 years).

What are the conditions to benefit from the opt-out?

  • Both employees under a French employment contract or employees seconded to France under a foreign employment contract (but who cannot benefit from a social security secondment) are eligible, provided they were not be affiliated to the French statutory old age insurance in the 5 years preceding the year in which they took their position in France.
  • The employee needs to justify a minimum level of contribution to another retirement scheme ensuring pension payments to the employee when the legal retirement age is reached. This minimum level of contributions is set by decree at € 20,000 per annum. This amount can be freely split between the employee and the employer.

The concept of “another retirement scheme” is not be restrictive; it can be contracted in France or abroad. However, it cannot allow the beneficiary to cash out on the pension prior to their actual retiring date (except in exceptional cases listed in the retirement scheme plan).

How to benefit from the opt-out?

  • A formal request has to be sent to the employer’s URSSAF in the 60 days prior to the affiliation of the employee to the French social security system. The request is made jointly with the employee.
  • It is also possible to send the request after the 60 days delay; in which case the French retirement contributions will need to be paid until receipt of the formal agreement from the URSSAF. A refund can be claimed retroactively for the contributions that were paid.
  • Evidence of the contributions made to “another retirement scheme” will need to be provided.
  • The form to make the request has yet to be published by the URSSAF.

 

Next steps:

  • Assess the population that can benefit from the exemption within your company and the cost / opportunity impact for both company and employees.
  • Decide on whether the company wishes to provide support for employees who wish to opt-out.
  • Prepare a campaign of information for eligible employees.
  • Prepare support documentation to make the claims / requests.
  • Prepare payroll software to enable exemptions from contributions.
  • Prepare claims for retroactive opt-out for eligible employees who arrived in France after July 11th, 2018.

 

Deloitte | Taj’s view

The “opt-out” regime represents an important financial incentive for inbounds to France considering the cost of statutory retirement coverage in France. It should be carefully managed and implemented in order for all parties to understand the impact on their retirement benefits.

Deloitte | Taj can assist in the opportunity assessment and in the actual implementation within your company.

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Nadia Hamya

Nadia Hamya, Associée, a acquis une solide expérience en matière de fiscalité individuelle et de mobilité internationale. Elle intervient régulièrement sur la mise en place et la gestion des politiques […]

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Sandro Assogna

Manager in the Global Employer Services department, Sandro has over 7 years of experience in international tax law and global mobility. He advises multinational groups in France and abroad in […]