The social charges in France are called the prélèvements sociaux, often also referred to by expatriates as 'the second French income tax', although unlike income tax they are not progressive.

Neither, however, are they social security contributions (cotisations sociales), as there is no direct correlation with individual social benefits, but whilst the scope of social charges is wider, the political vocabulary that is adopted is largely semantics.

Almost all sources of personal income and capital gains are liable to the charges, but as can be seen from the table below, they comprise four different taxes, not all of which apply to all income, and in the case of CSG apply at different rates for pension income.

The rates that apply this year for different types of income are shown on the table below. The rates remain unchanged from last year.

*In relation to investment/rental income and capital gains, S1 holders and EEA non-residents only pay the solidarity tax of 7.5% on such income, not the full social charges of 17.2%. Non-residents from outside of the EEA pay at the rate of 17.2% on net profits and gains.

As can be seen from the table, different rates of CSG apply on pension income, depending on your income. The table below shows the rates that apply to different income thresholds for a single person and a couple. The income thresholds have been increased by a minor amount for inflation for this year. The reference year used for assessment is your 2020 income.

These thresholds are higher for those with children or other dependants in the household.

You need to add to these basic CSG rates for pension income the CRDS payable at the rate of 0.5% and CASA of 0.3%, although those on a CSG rate of 0% or 3.8% do not pay CASA. That means the basic total rate on pension income is 9.1%.

The thresholds are, however, misleading, as the rate that will be used for pension income will depend on your total taxable income, not merely your pension income. That is to say it will depend on your ‘Revenu Fiscal de Référence' as shown on your tax notice. This means that for a couple who are taxed on a joint basis a common rate applies, irrespective if one of the spouses may otherwise be entitled to a reduced rate or exemption.

In addition to the exemption for low income, others who are exempt from the social charges on pension income are those who hold an S1 health certificate, government service pensions (teaching profession, local government, civil service, armed forces) and those whose health insurance cover is provided entirely through a private policy and who are not, therefore, in the French health system.

All such persons are entitled to 100% relief against the social charges on their pension income, although in the case of those on a government service pension other pension income remains liable unless exempt under the other provisions, eg, S1, low income.

Those who may be exempt need to carefully complete their income tax return and ensure that their tax notice is correct, as each year we hear from scores of readers who have been incorrectly taxed on the social charges.

The social charge CSG is partially deductible against French income tax, which therefore reduces the effective rate. The rate of deduction depends on your basic rate, as follows:

• At 9.2% it is 6.8%;

• At 8.3% it is 5.9%;

• At 6.6% it is 4.2%;

For those who pay at the rate of 3.8% it is entirely deductible.

The deduction occurs in the year following imposition.

It is not deductible for those who have adopted the flat-tax (Prélèvement forfaitaire unique - PFU) for investment income and gains.

Related Reading:

1. Guide to Taxes in France

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