Incentives to Increase Employment in SMEs: Financial Help and Tax Credits to Increase Employment and Business Competition in France
Often France is considered as the land of tight fiscal policy, a country lumbered with high taxes with little room for manoeuvre. This, however, is often not the case and there are several financial aids and tax credits which are designed to improve employment opportunities and facilitate healthy business competition between firms by decreasing the social charges which companies are currently under the impression that they have to pay.
The current French law, first implemented in January 2016, allows for an employment benefit which focuses on helping SMEs (Small and Medium-sized Enterprises). For a company to benefit from this financial aid it must employ fewer than 250 employees, whatever the type of company concerned; be it a partnership or micro-enterprise etc. It is important to note, however, that private individual employers and public employers such as the state itself are not liable to obtain this help.
Nevertheless, there are certain conditions which must be met by the SME to ensure the receipt of this aid. Thankfully the size of the business is based on a particular office and not on the size of the group which the SME may belong to. In other words, a firm which is part of a network which employs over 250 employees can still benefit from the grant if the firm itself employs fewer than 250 workers. In addition, the salary of the employees must be less than or equal to 1.3 times the French minimum wage.
So, what is the size of this financial aid? A maximum financial aid of €4 000 makes this benefit increasingly important for SMEs to take into account. The maximum benefit can be received for 24 months of work for a full time employee. The grant can also be received for a part-time employee, however, this total will, understandably, be less. Every quarter, €500 euros will be allocated for a full time employee and adjustments will be made depending on an employee’s leave and the number of days that they worked.
In order to receive the grant, the eligible company must send proof to validate the presence of an employee. This proof must be sent digitally using téléservice Sylae (a specialised program), every 3 months, following the deadline of every quarter.
There are also tax credits available to help companies increase their workforce and simultaneously become more competitive in a growing market. The French tax credit Crédit d’impôt pour la compétitivité des entreprises (CICE) exists, amongst other things, to allow firms to invest, look for new markets and business channels, innovate, enhance research and facilitate the recruitment process.
The CICE allows firms to decrease the amount of corporation tax that they are obliged to pay by 6% of all the eligible earnings and 9% of the eligible earnings from overseas offices. Interestingly, this rate has recently increased to 6% from the previous 4% in 2013 – so it is definitely worth considering! These firms, however, must already be subject to corporation tax and tax on revenues through official taxation regimes and can be any form of business; sole proprietorships, co-partnerships, limited liability companies etc.
What counts as eligible earnings? Only salaries which do not exceed 2.5 times the minimum wage (i.e. gross salaries which are less than €3666.55 per month in 2016) are eligible. When the annual salary exceeds this level, the salary is excluded from the tax credit.
Other financial grants such as Aide à la Première Embauche (Help for First Recruitment) and other tax credits exist in France and it is truly worth looking into them if you ever decide to invest in France. Here at Maupard we would be more than happy to advise you on this matter and show you how to make the most of these opportunities.
Do not hesitate to contact us by telephone on +33 (0) 1 53 93 94 20 or by e-mail to [email protected], so we can work out the needs of your business. Our team of experts is here to answer any questions you may have.