Most readers are likely to be familiar with the social charges (prélèvements sociaux) in France, often also referred to by expatriates as 'the second French income tax'.
Almost all sources of personal income and capital gains are liable to the charges, but 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. They remain unchanged from last year.
Contribution Sociale Généralisée (CSG) | 9.2% | 8.3% / 6.6% / 3.8% | 9.2% / 0.0% |
Contribution à la Réduction de la Dette Sociale (CRDS) | 0.5% | 0.5% | 0.5% / 0.0% |
Contribution Additionnelle deSolidarité pour l'utonomie (CASA) | 0% | 0.3% / 0.0% / 0.0% | 0.0% |
Prélèvement de Solidarité (PS) | 0.0% | 0.0% | 7.5% |
Total | 9.7% | 9.1% / 7.4% / 3.8%** | 17.2% / 7.5%* |
In relation to investment/rental income and capital gains* a reduced rate applies to certain households, which we reviewed recently in our article Social Charges, S1s and Exemptions.
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 1.6% for inflation for this year.
0% | <€11,614 | <€17,816 |
3.8% | <€15,183 | <€23,291 |
6.6% | <€23,564 | <€36,144 |
8.3% | >€23,564 | >€36,144 |
These thresholds are higher for those with children or other dependents 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. The reference year used for assessment in 2023 will be your 2021 income, as notified on your 2022 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.
Under some double taxation treaties pension income is entirely exempt from social charges, as is the case for US pensions. By contrast, UK state pensions are entirely taxable in France.
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, but for pension income charged at 8.3% the deduction is 5.9%. At 6.6% it is 4.2% and 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.
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