The “Pay-As-You-Earn” system of tax being withheld at source from each employee paycheck became standard in France in 2019. Resident income tax is complex, with a variety of different bandings, and different rates applying depending on whether an employee is single, married or married with children. Rates start at 0% and progress up to 45%.
French corporation tax rates used to vary depending on turnover and profits of each company, but as of financial years starting on or after 1 January 22, the rate of 25% applies to all businesses (on income sourced in France). VAT in France is 20% as standard, with a range of reduced rates for some essential goods.
Both employers and employees must contribute to the French social security system, which incorporates a wide range of coverage including health, work-related accidents, unemployment, retirement and more. Rates vary depending on each employee’s salary, location and personal circumstances, but generally speaking, employers contribute 47-50% of gross salary, and employees contribute 20-23%.