Section II: Payroll tax

1. Sums paid as remuneration to employees are subject to a tax at the rate of 4.25%. The sums taken into account are those used to determine the basis of assessment for the contribution provided for in article L. 136-1 of the Social Security Code, with the exception of the benefits mentioned in the I of articles 80 bis and 80 quaterdecies of this code. The reduction mentioned in I of article L. 136-2 of the Social Security Code is not applicable. This tax is payable by the companies and organisations that employ these employees, with the exception of local authorities, their personalised boards mentioned in article L. 1412-2 du code général des collectivités territoriales et de leurs groupements, des établissements publics de coopération culturelle mentionnés à l'article L. 1431-1 of the same code, departmental fire-fighting services, social action centres with their own personality when subsidised by local authorities, the municipal staff training centre, the establishment mentioned in article L. 1222-1 of the Public Health Code, the school boards and higher education establishments referred to in Book VII of the Education Code which organise training leading to the award on behalf of the State of a diploma certifying five years of study after the baccalauréat, which pay this remuneration when they are not liable for value added tax or were not liable for value added tax on at least 90% of their turnover for the calendar year preceding that in which the said remuneration was paid. The tax base payable by these persons or organisations is made up of a portion of the remuneration paid, determined by applying to the total of this remuneration the ratio existing, in respect of this same year, between the turnover that was not subject to value added tax and the total turnover. Turnover that was not subject to value added tax in its entirety or on at least 90% of its amount, as well as the total turnover mentioned in the denominator of the ratio, means total revenue and other income, including that corresponding to transactions that do not fall within the scope of value added tax. Turnover that has not been subject to value added tax referred to in the numerator of the ratio means total revenue and other income that has not given rise to a right to deduct value added tax.

Remuneration paid by employers whose turnover during the calendar year preceding the payment of such remuneration does not exceed the limits defined in I, III and IV of Article 293 B are exempt from payroll tax.

Companies falling within the scope of application of value added tax which have not in fact been subject to this tax by virtue of an interpretation formally accepted by the administration are liable for payroll tax.

Remuneration paid by the State from the general budget is exempt from payroll tax where this exemption does not distort conditions of competition.

1 bis. (Repealed).

1 ter. (Repealed for remuneration received from 1 January 2002).

2. (Repealed).

2 bis. The rate of payroll tax provided for in 1 is increased from 4.25% to 8.50% for the fraction between €8,573 and €17,114 and to 13.60% for the fraction exceeding €17,114 of annual individual remuneration. These limits are increased each year in the same proportion as the upper limit of the first bracket of the income tax scale for the previous year. The amounts obtained are rounded up, if necessary.

The increased rates are not applicable to remuneration paid by natural or legal persons, associations and bodies domiciled or established in the overseas departments.

3 a. The terms and conditions for the application of 1 are set by decree. This decree may lay down special rules for the calculation of payroll tax in respect of certain professions, in particular those covered by the agricultural regime with regard to social security laws.

A decree in the Council of State will lay down, as necessary, the terms and conditions according to which the ratio defined in 1 will be determined.

b. A decree in the Council of State shall set the conditions for the application of the first paragraph of 2a.

4. (Repealed)

5. The 4.25% rate provided for in 1 is reduced to 2.95%, in the departments of Guadeloupe, Martinique and Réunion, and to 2.55% in the departments of French Guiana and Mayotte.

6. The dispositions de l'article 1er de la loi n° 68-1043 du 29 novembre 1968, qui, sous réserve du 1, ont supprimé la taxe sur les salaires pour les rémunérations versées à compter du 1er décembre 1968, n'apportent aucune modification aux textes législatifs et réglementaires en vigueur, autres que ceux repris sous le présent article, et qui se réfèrent à la taxe sur les salaires.

7. The benefit of the non-application of the increased rates mentioned in the second paragraph of 2a and the application of the reduced rates defined in 5 of this article is subject to compliance with Article 15 of Commission Regulation (EU) No 651/2014 of 17 June 2014 declaring certain categories of aid compatible with the internal market in application of Articles 107 and 108 of the Treaty.