Cost of labor in France: overview (general principles)
The remuneration paid to wage earners is subject to social security contributions in France, provided that the wage earner works in France.
On average, the sums paid by employers represent an average of 45% of the remuneration per contract of wage earners, and the sums paid by the wage earners amount to around 23% of that same remuneration. The net remuneration paid to a wage earner amounts to around 53% of the total cost borne by the company (1-23%) / (1+45%) = 53%.
Conversely, for a high remuneration, the percentage of employer costs decreases very slightly. For a gross annual remuneration of €100 K, the employer contributions average 43%. For a remuneration of €200 K, the employer rate is just 40.70%.
Under certain conditions, social security law authorizes an exemption from paying social security in relation to profit-sharing schemes paid to employees.
And exceptions: how to substantially decrease the cost of labor in France
They are three ways manners to manage such a decrease: the first one is when a company has a research and development center in France, and therefore develops an innovative technology. The company can profit from the Research tax credit (CIR), eventually the statut JEI Young Innovative Company Status and the innovation subsidies and grants.
Benefiting the CIR can result in a decrease of labor costs up to 45-50%. This decrease can rise up to 90% if it can profit by the Young Innovative Company status as well. And if the company benefits also from innovation this rate can be even higher..
The second way is to get employment subsidies (aides à l’emploi). All companies are eligible to such subsidies, regardless of their activity.
Finally, remuneration not exceeding 1.3 times the SMIC benefits from a reduction allowing a substantial decrease in the social security contributions by employers. For a «Smicard» (a worker earning the minimum wage), the reduction limits the social security costs to 15% of the gross wages. Therefore the cost for a fulltime “Smicard” borne a company amounts to 1661 € per month.
Employment subsidies can be accumulated with the aforementioned decrease as outlined in the above paragraph.
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