Bonuses exempt from social security contributions and taxes

In the fight against inflation, the French government has implemented several measures over the summer of 2022 to support the purchasing power. The “Prime de Partage de la Valeur” is an example of one of these initiatives, which has been in place since 1^st July 2022. This allows employers to pay employees a bonus which is exempt from social security contributions as well as other contributions and taxes on their salaries.

The recipient is entitled to a maximum bonus of €3000 exempt from taxes and contributions per calendar year. However, it can be increased to €6000 if the employer implements a profit-sharing scheme. This must have been established on the date of the payment of the bonus, or concluded on the same financial year as that of the bonus payment.

It is also dependent on the date of payment and the employee’s remuneration. If their annual remuneration is less than three times the annual minimum wage for bonuses paid between 1^st July 2022 and 31^st December 2023, the social security flat rate is not applicable. If the annual remuneration is equal to at least three times the annual minimum wage for bonuses paid between 1^st July 2022 and 31^st December 2023 and bonuses paid from 1 January 2024, the bonus is not exempt from income tax.

Companies can benefit from this initiative under the following conditions:

Employers concerned:

• Employers under private law regarding employees holding an employment contract;
• Public industrial and commercial establishments;
• Public administrative establishments which employ staff under private law.

If these conditions are met, then the measure applies to the “prime de partage de la valeur” paid either:

• by temporary employment agencies to temporary employees when the company to which they are assigned pays a bonus to its employees;
• by “Esat” (establishment and work-related assistance) to workers with disabilities under a contract for support and assistance through work.

Employees concerned:

The exemption applies to

• employees bound by an employment contract;
• temporary employees;
• public officials under the authority of the public establishment;
• disabled workers bound to the Esat by contract for work-related assistance.

either

• on the date of the payment of the bonus;
• on the date the agreement was submitted;
• on the date of the signature of the unilateral decision specifying the terms of payment of the bonus.

The amount of the bonus can be modified according to the salary, seniority, classification level or the duration that the person has worked for the company. However, it cannot replace bonuses or pay-rises already included in the employment contract. The terms and conditions for the implementation of this incentive is subject to the company agreement.

If you wish to find out more, do not hesitate to contact us via telephone +33 (0) 1 53 93 94 20 or by mail at [email protected]. Our team of experts will happily assist you with any queries you might have

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